Oil tremor fills Russia’s supply gap as OPEC weighs in on market

The industrial facilities of the PCK Raffinerie Oil Refinery were filmed on March 8, 2022 in Schwedt / Oder, Germany. The company receives crude oil from Russia via a ‘friendly’ pipeline. REUTERS / Hannibal Hanschke

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  • Brent, WTI trades $ 4 to $ 5
  • UAE officials have differing views on the release plans
  • U.S. crude and fuel stocks fell last week, with SPR declining in 2002

MELBOURNE, March 10 (Reuters) – Oil prices rose on Thursday in volatile trade, following a sharp fall in the previous session as the market thought that large producers would increase supply to help narrow the production gap due to sanctions against Russia’s invasion. Ukraine.

Brent crude futures rose $ 2.53 or 2.28% to $ 113.67 a barrel at 0651 GMT after trading in the $ 5 range. The benchmark contract fell 13% in the previous session, its biggest one-day fall in almost two years.

US West Texas Intermediate (WTI) crude futures rose $ 1.64 or 1.51% to $ 110.34 a barrel after trading in the $ 4 range. The contract fell 12.5% ​​in the previous session, the biggest daily decline since November.

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Uncertainty over where and when to supply crude oil from Russia, the world’s second-largest exporter in a tight market, has led to widespread estimates of oil prices ranging from $ 100 to $ 200 a barrel.

“So it would be a mistake to suggest that the oil market is in turmoil because we are in an unprecedented situation,” said Stephen Innes, managing partner of SPI Asset Management.

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The comments of the UAE Energy Minister and the Ambassador of that country to Washington have sent conflicting signals.

UAE Energy Minister Suhail al-Masroue said on Twitter late on Wednesday that the Organization of the Petroleum Exporting Countries and its allies, including Russia, were committed to increasing the monthly supply of oil by 400,000 barrels a day, known as OPEC +. Sharp cuts in 2020. read more

A few hours ago, after the United Arab Emirates’ ambassador to Washington invaded Ukraine, prices fell on comments that his country was encouraging OPEC to consider more production to fill the supply gap due to sanctions on Russia. Russia calls its incursion a “special operation” to disarm its neighbors. read more

The comments by UAE officials take into account US moves to ease sanctions on Venezuelan oil and efforts to close a nuclear deal with Tehran, which could lead to more oil supplies from Iran later this year. read more

Thursday’s talks between Russia and Ukraine’s foreign ministers in Turkey also provided a market reason for the suspension.

Although the United Arab Emirates and Saudi Arabia have spare capacity, due to low investment in infrastructure over the past few years, some other OPEC + manufacturers are finding it difficult to achieve their production targets, which could reduce production potential.

“We think increasing production in this environment will be a challenge for OPEC +,” said Vivek Dhar, Commonwealth Bank’s inventory analyst.

Meanwhile, U.S. crude oil and fuel reserves plummeted last week, adding to concerns about an already tight global supply.

According to a Reuters poll, crude inventory fell 1.9 million barrels to 411.6 million barrels in the week to March 4, from analysts’ expectations of a drop of 657,000 barrels.

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U.S. crude oil holdings in strategic petroleum reserves fell to 577.5 million barrels, the lowest level since July 2002.

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Sonali Paul Report; Editing by Sri Navaratnam, Shivani Singh and Tom Hoke

Our standards: Thomson Reuters Trust Principles.

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