Oil prices reduced their gains to 4% during trading today, Wednesday, with Brent crude trading below 110 dollars, with the release of the US inventories report and the decision of the OPEC + alliance.
And oil prices jumped more than 8%, and Brent crude exceeded $113 during trading, as fears escalated of supply disruptions due to the Russian-Ukrainian war.
And traders in the oil markets have increased fears of a shortage of supply in the wake of severe sanctions on Russian banks amid the escalation of the conflict in Ukraine, as traders seek to search for alternative oil sources in an already narrow market.
The OPEC + alliance decided, at its meeting today, to maintain the increase in oil production by 400,000 barrels per day during next April, noting that the current fluctuations are not caused by changes in market fundamentals, but due to geopolitical developments.
Oil Prices Today
The prices of West Texas Intermediate crude futures – for delivery in April – rose by 3.8%, to reach 107.35 dollars a barrel, after exceeding 112 dollars during trading.
The price of Brent crude futures – for delivery in May 2022 – also rose by 4.2%, recording 109.23 dollars per barrel.
Oil prices ended their trading, yesterday, Tuesday, with an increase of about 8%; Brent crude rose close to 105 dollars, despite the International Energy Agency’s announcement of the release of 60 million barrels of oil from emergency reserves; In an attempt to reduce the repercussions of the Russian invasion of Ukraine on the oil markets.
US oil stocks fell by 2.6 million barrels last week, to 413.4 million barrels.
Meanwhile, US gasoline and distillate stocks fell by 0.5 and 0.6 million barrels, respectively.
Analysts – polled by Reuters – expected an increase in crude oil stocks by 2.7 million barrels.
Meanwhile, the latest data issued by the American Petroleum Institute showed that US crude oil stocks fell by 6.1 million barrels for the week ending on February 25.
“The trade turmoil is starting to get people’s attention,” said Westpac economist, Justin Smirk.
He added: “Issues related to trade finance and insurance affect exports from the Black Sea, as supply shocks unfold.” Russian oil exports represent about 8% of global supply.
ExxonMobil said on Tuesday it would exit Russian oil and gas operations as a result of Moscow’s invasion of Ukraine, and the decision would see the company withdraw from managing large production facilities on Sakhalin Island in Russia’s Far East.
Russian Oil Exports
At the same time, while Western powers have not directly imposed sanctions on energy exports, American traders in hubs in New York and the Gulf of Mexico are avoiding Russian crude.
“People don’t touch Russian barrels,” a New York trader said. “You might see some on the water now, but they were bought before the invasion. There won’t be much after that.”
India’s state-run Bharat Petroleum Corporation is seeking additional oil from Middle Eastern producers for April, fearing that Western sanctions against Russia could hurt delivery of Urals crude.
Saudi Aramco, the world’s largest oil exporter, may raise crude oil prices for Asia sharply in April, with most grades differentials reaching all-time highs as global supplies tighten due to financing and shipping issues from sanctions against Russia, trade sources said.
International Energy Agency member states agreed on the coordinated release of 60 million barrels of oil, capping strong market gains, but analysts said it would only provide temporary relief on the supply front.
“They helped limit the rise, but if you want to change prices, you need something more sustainable,” Smirk said.
The International Energy Agency said commercial oil stocks were at their lowest since 2014.