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Oil Companies React To The EU's Russian Oil Restriction And The Conclusion Of The Shanghai Lockout


01/06/2022


Oil Companies React To The EU's Russian Oil Restriction And The Conclusion Of The Shanghai Lockout
On Wednesday, oil prices rose as European Union leaders agreed to a partial and phased ban on Russian oil, and China terminated its COVID-19 lockdown in Shanghai.
 
By 0817 GMT, Brent crude was up $1.71, or 1.5 per cent, to $117.31 per barrel. West Texas Intermediate (WTI) crude in the United States increased $1.67, or 1.5 pe rcent, to $116.34.
 
Both benchmarks rose in May, indicating the sixth consecutive month of price increases.
 
"The mood on the oil market is seemingly turning ever more bullish," said Julius Baer analyst Norbert Rucker. "Europe's embargo and China's partial reopening is fuelling supply fears and lifting oil prices."
 
On Monday, EU leaders agreed in principle to limit 90 percent of Russia's oil imports by the end of the year, the toughest penalties imposed by the EU since the start of the invasion of Ukraine, which Moscow refers to as a "special military operation."
 
Sanctions on crude will be phased in over six months and on refined products over eight months if fully implemented. As a concession to Hungary and two other landlocked Central European countries, the embargo exempts pipeline oil from Russia.
 
Shanghai's stringent COVID-19 lockdown ended on Wednesday after two months, raising hopes for increased fuel demand in the country.
 
Capping gains were reports that some producers were exploring the idea of suspending Russia's participation in a an OPEC+ production deal on expectations such a move would increase supply.
 
OPEC+ is made up of members of the Organization of Petroleum Exporting Countries as well as their allies.
 
"The full reopening of Shanghai from COVID-19 restrictions may boost sentiment at the periphery, but the possible exemption of Russia by OPEC, from the output agreement, is the bigger story," said Jeffrey Halley, senior market analyst at OANDA.
 
While there was no explicit push for OPEC countries to pump additional oil to compensate for any prospective Russian deficit, the Wall Street Journal reported, citing OPEC delegates, that some Gulf members had begun preparing an output increase sometime in the next several months. more info
 
According to a U.S. Energy Information Administration report released on Tuesday, crude oil output in the United States increased by more than 3% in March, reaching its highest level since November.
 
According to Reuters polled analysts, crude oil inventories in the United States fell last week, while gasoline and distillate inventories grew. On Thursday, the government will release official figures.
 
(Source:www.investing.com)