Oil / Commodities - Oil rose Monday as the U.S. and Europe prepare to impose more sanctions on Russia following alleged atrocities against Ukrainian civilians. WTI climbed toward $105 a barrel after closing 4% higher on Monday, the biggest gain in two weeks. Washington is slated to announce additional sanctions this week according to National Security Advisor Jake Sullivan, who said these may contain curbs on energy. European policy makers including French President Macron also flagged scope for further steps. Oil rallied to the highest level since 2008 in the first quarter as Russia’s invasion disrupted supplies in an already tight market faced with roaring demand and dwindling stockpiles. The U.S. and the U.K. have already moved to bar Russian oil and there is gathering momentum for some form of similar actions from the EU, although its dependence on flows is higher. The possibility of new curbs on Russian energy is offsetting the impact in the global crude market of a vast release by the U.S. from the nation’s Strategic Petroleum Reserve in a bid to tame prices, ease the burden on consumers, and peg back inflation. Other countries have said that they will also make drawdowns. Futures remain in backwardation where near-term prices remain above longer-dated ones. Brent’s prompt spread – the gap between its two nearest contracts – jumped to $1.66 a barrel from $1.53 on Monday. In a further sign of tightness, Saudi Arabia has raised prices for all regions while demand from Mideast cargoes surge as buyers shun Russia. Saudi Aramco increased its Arab Light crude for May shipments to Asia to $9.35 a barrel above the benchmark it uses, a record differential. Goldman Sachs estimates the market to have likely had a deficit of 1.5 million barrels a day in recent weeks, with inventories at the lowest in recent history on a demand-adjusted basis. The most compelling short-term opportunities were in distillates such as diesel and jet fuel.
Newsletter - April 5, 2022
Newsletter - April 5, 2022
Newsletter - April 5, 2022
Oil / Commodities - Oil rose Monday as the U.S. and Europe prepare to impose more sanctions on Russia following alleged atrocities against Ukrainian civilians. WTI climbed toward $105 a barrel after closing 4% higher on Monday, the biggest gain in two weeks. Washington is slated to announce additional sanctions this week according to National Security Advisor Jake Sullivan, who said these may contain curbs on energy. European policy makers including French President Macron also flagged scope for further steps. Oil rallied to the highest level since 2008 in the first quarter as Russia’s invasion disrupted supplies in an already tight market faced with roaring demand and dwindling stockpiles. The U.S. and the U.K. have already moved to bar Russian oil and there is gathering momentum for some form of similar actions from the EU, although its dependence on flows is higher. The possibility of new curbs on Russian energy is offsetting the impact in the global crude market of a vast release by the U.S. from the nation’s Strategic Petroleum Reserve in a bid to tame prices, ease the burden on consumers, and peg back inflation. Other countries have said that they will also make drawdowns. Futures remain in backwardation where near-term prices remain above longer-dated ones. Brent’s prompt spread – the gap between its two nearest contracts – jumped to $1.66 a barrel from $1.53 on Monday. In a further sign of tightness, Saudi Arabia has raised prices for all regions while demand from Mideast cargoes surge as buyers shun Russia. Saudi Aramco increased its Arab Light crude for May shipments to Asia to $9.35 a barrel above the benchmark it uses, a record differential. Goldman Sachs estimates the market to have likely had a deficit of 1.5 million barrels a day in recent weeks, with inventories at the lowest in recent history on a demand-adjusted basis. The most compelling short-term opportunities were in distillates such as diesel and jet fuel.