The black liquid is bullish towards the start of the London trading session on Thursday, with both major benchmarks up by over 1%, but remained in a narrow range after supplies from Libya shook markets earlier in the week.
The global benchmark, the Brent oil futures is bullish by 1.39%, currently trading $108.28 a barrel, while the United States benchmark, the West Texas Intermediate (WTI) CRUDE futures is also bullish by 1.34%, currently trading $103.59 a barrel, as of the time of this writing.
Many analysts expect that the oil markets are more likely to become even more volatile soon, with the European Union still weighing a ban on Russian oil for its invasion of Ukraine on Feb. 24. Asides from this, situations in China and Libya are also weighing in on prices.
What you should know
- European Union countries are currently evaluating methods to offset a potential ban on Russian oil, but no decision has been made yet on a sixth package of sanctions eight weeks after the war in Ukraine started.
- Asides potential sanctions from the EU, another factor weighing on price is the situation in Libya, who is a member of the Organization of Petroleum Exporting Countries and its allies (OPEC+) cartel.
- Libya on Wednesday said that it was losing more than 550,000 barrels per day of oil output thanks to blockades at major fields and export terminals.
- Investors also continue to monitor fuel demand in China, as the country slowly eases strict COVID-19 curbs. However, the oil market remains tight as the OPEC+ continues its struggle to meet its production targets.
- Commonwealth Bank commodities analyst Tobin Gorey told Reuters that, “Oil, and energy markets generally, have plenty of big issues in a state of flux to stay quiet for long.”
- SPI Asset Management managing director Stephen Innes said in a note that, “There is not much incremental news overnight, with a trajectory from here really hinging on whether other nations join the UK/U.S. in banning Russian oil imports.”
The U.S. Energy Information Administration (EIA) released data on oil supply on Wednesday which revealed a draw of 8.020 million barrels for the week ended Apr. 15. This draw was against a forecast of a 2.471-million-barrel build expected during the week in question and also negated the 9.382-million-barrel build that was reported during the previous week. Crude oil supply data from the American Petroleum Institute released the day before, showed a draw of 4.496 million barrels. The drawdown seen last week was the biggest drawdown in holdings since January 2021.
So far, Oil has rallied by more than a third this year, hitting the highest since 2008 after Russia’s invasion of its smaller neighbour sent shockwaves through the global energy market. The conflict has boosted inflation and spurred a rerouting of crude flows.
