Brent Hits $110 as Market Ignores Russian Oil, Gas
Crude oil prices rose further early Wednesday after skyrocketing the previous day, with Brent topping $110 per barrel, as customers avoid buying Russian oil and gas despite the lack of sanctions in the sector.
The market viewed the International Energy Agency’s announcement of a release of strategic petroleum reserves as “a drop in the ocean,” OANDA analyst Jeffrey Halley said in an overnight Tuesday note.
US crude inventories reportedly posted a surprise fall of 6.10 million barrels, assisting the rally, the analyst noted.
Buyers are also scrambling to buy supplies in Asia, and the Organization of the Petroleum Exporting Countries and allied producers, or OPEC+, have signalled that it would be sticking to its planned 400,000 barrel-per-day gradual supply increase.
However, even an announcement of a “larger increase would not materially impact markets for more than the short term” as OPEC compliance is well above 100%, indicating the group is already pumping as much as it can, Halley said.
He reiterated that Brent crude is expected to top $120 per barrel and could trade to almost $130.
Market Braces for Russia’s Retaliation against Sanctions
Fears of supply disruptions from the Ukraine conflict are intensifying in the market, causing crude oil prices to rally, Australia’s ANZ Bank said in a Wednesday note. The International Energy Agency’s announcement of a release of 60 million barrels of oil from reserves failed to calm nerves, the bank noted.
The technical committee of the Organization of the Petroleum Exporting Countries, or OPEC, cut its forecast for 2022 daily oil surplus by about 200,000 barrels per day to 1.1 million barrels per day (mbpd).
Meanwhile, European natural gas extended gains, also on the risk of supply disruptions. Russian gas flows into Europe remain uninterrupted but the prospect of Moscow cutting supplies in response to sanctions still looms over markets, ANZ Bank said.
Policymakers are preparing for disruptions, with EU energy ministers meeting to discuss options and EU Energy Commissioner Kadri Simson saying it cannot rule out retaliation by Russia. #Brent Hits $110 as Market Ignores Russian Oil, Gas
