Oil Becomes Cheaper Due To Russian-Ukrainian Talks And Data On Stocks In The US

Oil storage containers are seen amid the coronavirus disease (COVID-19) pandemic in Los Angeles, California, USA on April 7, 2021. REUTERS/Lucy Nicholson/Files

Russia says some deals with Ukraine are close to being agreed
In China, the number of new local cases of infection with COVID-19 has almost halved
IEA downgrades forecast for oil demand growth in 2022
EIA data show bigger-than-expected inventory build

March 16 – Oil fell in another volatile session on Wednesday as traders reacted to welcome progress in peace talks between Russia and Ukraine and an unexpected increase in U.S. inventories.

Around noon in New York, global benchmark Brent oil was slightly lower and US crude was slightly higher.

The oil market has been on a roller coaster for more than two weeks, trading in a wide range of several dollars a day.

On Wednesday, global benchmark Brent oil fluctuated between $97.55 and $103.70 and was down $1.41 to $98.50 a barrel as of 13:21 ET (1721 GMT). US West Texas Intermediate (WTI) lost 54 cents to $95.87 a barrel.

A strong rally last week pushed Brent briefly up to $139 a barrel on concerns about a prolonged disruption to supplies from Russia. Now a cascade of sales has led to significant price cuts, but some analysts warn that this reflects too much optimism that the war will end soon.

“We live here from headline to headline,” said Robert Yauger, director of energy futures at Mizuho.

The United States and other countries have imposed tough sanctions on Russia after it invaded Ukraine more than two weeks ago. This disrupted the Russian oil trade of over 4-5 million barrels of crude per day.

Brent rose 28% in six days and then fell 24% over the next six sessions, counting Wednesday. A number of factors contributed to the reversal, including modest hopes for a peace deal between Russia and Ukraine and weak signs of progress between the United States and Iran on resurrecting a 2015 deal that would allow the Islamic Republic to export oil if it agrees to limit its nuclear resources. ambition.

In addition, demand in China is expected to slow due to a surge in coronavirus cases, although numbers showed fewer new cases and hopes for stimulus from China spurred stocks.

The International Energy Agency (IEA) said three million barrels a day of Russian oil and oil products may not hit the market in early April as sanctions are in place and buyers abstain.

“These losses could increase if bans or public stigma intensify,” the Paris-based IEA said in a report that also showed a decline in oil demand forecast for 2022.

U.S. inventories rose 4.3 million barrels against a loss, while inventories at the Cushing, Oklahoma hub also rose, slightly easing concerns about low inventories there.

Oil closed below $100 on Tuesday for the first time since the end of February. On March 7, prices hit a 14-year high.

Later Wednesday, the Federal Reserve is expected to raise US interest rates for the first time in three years and make recommendations for future tightening. Investors expect the central bank to raise rates by at least 25 basis points.

Signs of progress in peace talks between Russia and Ukraine added to the bearish mood. The President of Ukraine said that the positions of Ukraine and Russia sound more realistic, but time is needed. read more The Russian Foreign Minister said that some deals with Ukraine are close to being concluded. More

“Fears over supply disruptions are being alleviated by early signs of progress in ceasefire talks between Russia and Ukraine,” said Steven Brennock of oil broker PVM.

“Nevertheless, the cessation of hostilities is still far away.”

Additional report by Emily Chow; Edited by Barbara Lewis, Louise Havens, David Gregorio and Tim Achmann.

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