The two major benchmarks of the black liquid are bullish towards the start of the New York trading session today as United States (US) president, Joe Biden, is set to meet with European leaders on Thursday to have an emergency NATO meeting.
Also weighing in on price is the disruption of Russian and Kazakh crude exports via the CPC pipeline and also a decline in the U.S. crude inventories, which are all increasing investors’ concerns about a tight global oil supply.
The global benchmark, the Brent crude futures is up 4.30%, currently trading $120.44 a barrel after the benchmark had fallen to a low of $114.45. The U.S. benchmark, the West Texas Intermediate (WTI) crude futures is currently up 4% to $113.67 a barrel, after hitting a low of $108.38 in the Asian session, earlier today.
What you should know
- The market remains on edge over the prospect of further sanctions on Russia, the world’s second-largest crude exporter, after it launched a special military operation into Ukraine, marking the start of the war between the two nations.
- U.S. President Joe Biden is set to announce more Russian sanctions when he meets with European leaders on Thursday in Brussels to have an emergency meeting of NATO.
- European Union member countries remain split on whether to ban imports of Russian crude and oil products which still continue to flow, but this might change once short-term contracts run out. SEB analyst Bjarne Schieldrop stated, “Next up are Russian exports in April and there we see cancelled cargoes and problems for Russia to find buyers. India and China will buy but that won’t be enough to avoid declining Russian exports.”
- Russia on Tuesday warned of a drop in oil exports via the Caspian Pipeline Consortium (CPC) of up to 1 million barrels per day (bpd), representing 1% of global oil production, because of storm-damaged berths.
- CPC exports stopped fully on Wednesday and repairs will take at least one and a half months, according to a port ship agent.
- Also weighing in on oil prices is the decline in crude stockpiles in the United States, the world’s biggest oil consumer. The latest data from the American Petroleum Institute industry group showed U.S. crude stocks fell by 4.3 million barrels for the week ended March 18, according to market sources.
The Official U.S. inventory data is due from the Energy Information Administration later today. Vanda Insights founder Vandana Hari told Reuters, “We expect continued high volatility through the rest of the week, and especially around Thursday’s NATO summit.”