Commodities and Futures News

Crude Oil Higher; Proposed EU Embargo Adds to Supply Worries

2022.05.05 16:01

Crude Oil Higher; Proposed EU Embargo Adds to Supply Worries

By Peter Nurse   

Investing.com — Oil prices traded higher Thursday, continuing the previous session’s positive tone after the European Union laid out plans to end the import of Russian crude and ahead of the latest meeting of top producers.

By 8:45 AM ET (1245 GMT), U.S. crude futures traded 1.3% higher at $109.20 a barrel, while the Brent contract rose 1.5% to $111.84 a barrel. Both benchmarks gained more than $5 a barrel on Wednesday.

U.S. Gasoline RBOB Futures were up 0.5% at $3.6696 a gallon.

The EU proposal, which needs unanimous backing from the 27 countries in the bloc, suggests an embargo on crude in six months as well as a phasing out of imports of refined products by the end of 2022.

“There is the risk of secondary sanctions from the U.S. on Russian oil, which would make it difficult for any country to buy Russian oil,” said analysts at ING, in a note. “Given the tightness in the supply and demand balance, the market would not be able to cope with almost a full loss in Russian oil supply, and so if we were to see this, we would see significantly higher prices.”

This potential additional loss of global supply is unlikely to be made up by the Organisation of Petroleum Exporting Countries and allies such as Russia, a group known as OPEC+, at least in the short term.

The group meets Thursday and is widely expected to agree to another modest monthly increase of 432,000 barrels per day in its production target for June.

“Whilst they may agree to this increase, in practice, the group is unlikely to hit this target. For several months now, OPEC+ members have fallen short of their agreed output levels, with disruptions and a lack of investment in fields weighing on output,” ING added.

This is likely to ensure that the prices remain elevated, given concerns over weaker Chinese demand, as the largest importer of crude struggles to contain its most serious COVID outbreak since the original in late 2019.

Millions have been under strict lockdown in Shanghai, the country’s financial hub, for more than a month, and Beijing is hoping mass testing and the closure of many of its transport systems will isolate the virus before it spreads. 

A private-sector survey on Thursday showed China’s services sector activity contracted at the second-steepest rate on record in April 2022, suggesting the pandemic measures in place are already having an impact on the country’s economic activity.

The latest U.S. inventory data from the Energy Information Administration, released Wednesday, showed crude stocks were up by 1.2 million barrels last week after more oil was released from strategic reserves.

In the private sector, U.K. oil major Shell (LON:RDSa) reported a record first-quarter profit of $9.13 billion, boosted by higher oil and gas prices, even after writing down $3.9 billion as a result of its decision to exit operations in Russia.

 

 

Source

Related Articles

Leave a Reply

Back to top button
bitcoin
Bitcoin (BTC) $ 106,495.53 1.65%
ethereum
Ethereum (ETH) $ 3,395.15 5.53%
xrp
XRP (XRP) $ 3.16 2.42%
tether
Tether (USDT) $ 1.00 0.00%
solana
Solana (SOL) $ 263.06 6.11%
bnb
BNB (BNB) $ 686.07 0.40%
dogecoin
Dogecoin (DOGE) $ 0.360012 3.63%
usd-coin
USDC (USDC) $ 1.00 0.00%
cardano
Cardano (ADA) $ 0.994235 2.38%
staked-ether
Lido Staked Ether (STETH) $ 3,387.59 5.45%
tron
TRON (TRX) $ 0.258725 4.62%
chainlink
Chainlink (LINK) $ 25.92 3.34%
avalanche-2
Avalanche (AVAX) $ 36.63 4.58%
wrapped-steth
Wrapped stETH (WSTETH) $ 4,041.12 4.70%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 106,373.50 1.51%
stellar
Stellar (XLM) $ 0.439087 3.77%
sui
Sui (SUI) $ 4.42 3.03%
hedera-hashgraph
Hedera (HBAR) $ 0.336918 6.51%
the-open-network
Toncoin (TON) $ 5.15 1.81%
shiba-inu
Shiba Inu (SHIB) $ 0.00002 2.77%
weth
WETH (WETH) $ 3,393.17 5.63%
polkadot
Polkadot (DOT) $ 6.46 3.24%
litecoin
Litecoin (LTC) $ 119.45 4.77%
leo-token
LEO Token (LEO) $ 9.73 0.09%
bitget-token
Bitget Token (BGB) $ 7.44 4.28%
bitcoin-cash
Bitcoin Cash (BCH) $ 439.47 1.56%
hyperliquid
Hyperliquid (HYPE) $ 24.91 7.21%
uniswap
Uniswap (UNI) $ 12.79 2.01%
wrapped-eeth
Wrapped eETH (WEETH) $ 3,588.33 5.55%
usds
USDS (USDS) $ 0.999473 0.06%
official-trump
Official Trump (TRUMP) $ 33.12 7.82%
pepe
Pepe (PEPE) $ 0.000016 7.71%
near
NEAR Protocol (NEAR) $ 5.14 4.45%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.23%
aave
Aave (AAVE) $ 351.73 6.40%
aptos
Aptos (APT) $ 8.47 2.28%
ondo-finance
Ondo (ONDO) $ 1.48 10.49%
internet-computer
Internet Computer (ICP) $ 9.27 1.73%
ethereum-classic
Ethereum Classic (ETC) $ 27.97 0.96%
whitebit
WhiteBIT Coin (WBT) $ 28.50 0.04%
monero
Monero (XMR) $ 219.73 2.65%
mantle
Mantle (MNT) $ 1.20 2.51%
vechain
VeChain (VET) $ 0.049449 2.76%
crypto-com-chain
Cronos (CRO) $ 0.141037 1.60%
jupiter-exchange-solana
Jupiter (JUP) $ 0.863758 10.89%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.441553 1.69%
render-token
Render (RENDER) $ 7.09 3.85%
dai
Dai (DAI) $ 1.00 0.02%
mantra-dao
MANTRA (OM) $ 3.59 1.10%
layer-one-x-2
Layer One X (L1X) $ 26.64 532.62%