Oil prices rise 3%, and Brent crude is above $104
Oil prices rose about 3% during trading today, Wednesday, May 11, 2022, after losses of nearly 10% during the previous two sessions.
The rally is supported by concerns about supplies; The European Union is working to win support for a Russian oil embargo.
Major producers have warned that they may struggle to plug the deficit when oil demand improves.
Oil Prices Today
Brent crude futures prices, for July delivery, rose by 2.95%, to $104.46 a barrel.
Also, futures contracts for West Texas Intermediate crude – for delivery in June – rose by 3%, to reach $102.17 a barrel.
Oil prices ended their trading on Tuesday, May 10, 2022, down by more than 3%, after a volatile session, due to pressures with the strength of the US dollar, as well as the looming risks of stagnation of economic activity.
Oil prices fell along with commodity and stock markets this week, on concerns about economic activity being hurt by the extended coronavirus restrictions in China and sharp interest rate hikes in the United States.
Russian Oil Embargo
However, the supply side still faces challenges. The European Union has proposed a Russian oil embargo, but the vote, which needs unanimous support, has been postponed, with Hungary opposed, and other European countries fearing their economies could be hurt.
The effect of the ban may be limited if the ban is eased to ease the concerns of Eastern European members, but analysts said, oil prices may continue to rise.
“Even if we see some measures eased, it is likely that EU sanctions will continue to significantly reduce EU imports of Russian oil and refined products,” Commonwealth Bank analyst Vivek Dar said in a note.
UAE Energy Minister Suhail Al Mazrouei highlighted supply concerns, and warned on Tuesday that when fuel demand recovers from the coronavirus pandemic, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, called the OPEC+ alliance, may not be able to meet demand in light of the coronavirus pandemic. Significant decline in fossil fuel investment.
Al-Mazrouei’s comments came on the heels of statements by Saudi Energy Minister Prince Abdulaziz bin Salman that the world needs to pay attention not only to the tight supply of crude oil, but to energy production, which is running out on a larger scale.
Capping market gains, the dollar settled near a two-decade high, before US inflation data was released, which could hint at the Fed’s policy outlook, making crude oil more expensive for buyers using other currencies.
Factory inflation in China fell to its lowest level in one year in April, as state-led production efforts bolstered supply, and the Corona shutdown in key industries reduced demand, but it could give policymakers scope for more stimulus to support faltering economy
OPEC Production And The World
According to the report, OPEC’s production of crude oil may record 28.95 million barrels per day this year, down from the previous estimate of 28.81 million.
As for OPEC oil production in 2023, it is estimated to reach 29.54 million barrels per day, up from 29.37 million estimated last month.
World production of oil and other liquids is likely to reach 99.89 million barrels per day in 2022, down 0.3% from previous forecasts, according to the Energy Information Administration.
The Energy Information Administration expects global oil and liquids production to reach 101.60 million barrels per day next year, compared to previous estimates of 102.21 million.