Oil Rises as EU Declines to Sanction Russian Imports
Oil traded higher as the European Union, EU, insists on not sanctioning the importation of Russian oil and natural gas, deciding instead to prohibit coal imports.
Meanwhile, a report showed an unexpected rise in US inventories and China extended a lockdown on the city of Shanghai to quell rising Covid-19 infections. West Texas Intermediate crude oil for May delivery was last seen up US$1.24 to US$103.20, while June Brent crude, the global benchmark, was up US$0.84 to US$107.48.
The EU is proposing new sanctions on Russia in response to reports of atrocities and murders of civilians by its troops in areas of Ukraine recently recaptured by Ukrainian forces. It opted to sanction coal imports, even as it faces pressure to halt oil and gas purchases from the country.
“Germany’s Foreign Minister Baerbock has said that the EU’s fossil energy dependence on Russia must be phased out completely – with coal to go first and oil and gas to follow later.
The EU is thus keeping this sharpest sword in its armoury of sanctions in reserve for now. Whether it is drawn will depend in part on how swiftly the EU countries can reduce their dependence on Russian oil and gas,” Commerzbank analyst Carsten Fritsch said in a note.
China is extending a quarantine on the commercial centre of Shanghai to combat rising Covid-19 infections in the city of 26 million, cutting demand in the world’s largest oil importer.
In its weekly survey, the American Petroleum Institute reported US oil inventories rose by 1.08-million barrels last week, while analysts, on average, forecast a drop of 1.56-million barrels, according to Investing.com. The Energy Information Administration will release its official survey of oil stocks later on Wednesday morning.
U.S Total Crude Oil Stocks Fall
U.S crude oil stocks, including those in the Strategic Petroleum Reserve, fell by 1.3 million barrels in the week ended April 1 following a decrease of 6.5 million barrels in the previous week.
Excluding inventories in the SPR, commercial crude oil stocks rose by 2.4 million barrels after a 3.4 million barrel decline in the previous week, compared with the 2.8 million barrel decrease expected in a survey compiled by Bloomberg.
Stocks in the SPR fell by 3.7 million in the week after falling by 3 million in the previous week. Overall crude oil stocks were 0.1% below the previous week but were still down 14% from a year earlier. Crude oil inventories are about 14% below the five-year average for this time of the year.
Gasoline stocks fell by 2 million barrels, greater than the 400,000 barrel decrease expected. Gasoline stocks were down 0.9% from the previous week, but up 0.9% from a year earlier. READ: Nigeria Has Room for More Public Debt, FSDH Research Insists
Distillate stocks gained by 800,000 barrels in the current week, compared with an expected decrease of 600,000 barrels. Distillate stocks were up 0.7% from the previous week but were still 21.5% lower than in the same week last year. Refineries operated at 92.5% of their capacity, up from 92.1% in the previous week. #Oil Rises as EU Declines to Sanction Russian Imports