Oil rose for a third day as threats from world production exacerbate already hot physical supply markets, while the Group of Seven agreed to study a price cap for Russian oil.
West Texas Intermediate futures rose to near US $ 112 on Tuesday. G-7 leaders said they want ministers to urgently examine how Russian oil and gas prices can be curbed, a move that comes when government data show that the Urals have appreciated in relation to the cru Brent.
The most notable movements in recent days have been in more specialized market indicators. A contract known as the front-line date exchange, an indicator of the strength of the key North Sea market that sustains much of the world’s crude oil prices, hit a record high of more than $ 5 a barrel. The recovery comes amid growing supply cuts in Libya and Ecuador, exacerbating the ongoing market tightening.
“We’re in a period of crisis, it’s hard to see a significant easing in crude oil prices,” John Kilduff said. There is a lot of strength with China relaxing its COVID restrictions and starting its independent refineries, “we will have another part of the demand for crude oil,” while China relaxes its COVID-19 restrictions.
Oil has risen about 50 percent this year, but the strength of physical markets has been offset by a sharp drop in overall prices in recent weeks. While fears of a global economic slowdown have weighed on futures, demand remains strong for the time being. Retail gasoline prices in the United States remain close to record highs, causing pain to consumers. The recovery of COVID-19 and the scarcity of refining capacity to manufacture fuels continue to keep prices at historic highs.
The stagnant supply situation is being revealed in the WTI-Brent differential, which grew to US $ 6.19, the widest in almost three months. “European demand will remain robust, especially as natural gas supplies are depleted, while US demand for crude oil is weakening,” said Ed Moya, senior market analyst at Oanda.
Prices
- The WTI for delivery in August rose $ 2.19 to settle at $ 111.76 a barrel in New York.
- Brent for the August liquidation earned US $ 2.89 to US $ 117.98 a barrel.
Oil also rose, as broader sentiment was fueled by China’s decision to halve the time newcomers have to spend in isolation, the biggest change so far in its pandemic policy.
Travelers to China must spend seven days in centralized quarantine and then monitor their health for three more days at home, according to a government protocol. This compares to 14 days of hotel quarantine in many parts of China today and up to 21 days of isolation in the past.
The prospect of an additional supply of two of OPEC’s main producers also seems limited. French President Emmanuel Macron told US President Joe Biden that the UAE and Saudi Arabia are already pumping as much as they can. Macron transmitted a conversation he held with the ruler of the United Arab Emirates Sheikh Mohammed bin Zayed. OPEC + ministers meet on Thursday.