Oil / Commodities - Oil erased early losses after the EU tip-toed around sanctions on Russian oil, and investors weighed the outlook for the dollar. WTI crude traded near $102 a barrel after slipping as much as 1.6% to trade below $100 a barrel earlier this week. While the EU will press on with additional penalties against Moscow for the war in Ukraine, including a ban on coal, crude will not yet be targeted. The dollar held gains after jumping on Tuesday as investors digested the prospect of a swift reduction in the Federal Reserve’s debt holdings, part of stepped up monetary tightening to combat soaring inflation. A stronger currency typically makes commodities priced in the currency less attractive. Oil surged by a third in the first quarter as the Russian invasion and backlash from the EU and the U.S. roiled markets. While the U.K. and Washington have moved to bar Russian crude, it is harder for the EU to follow suit given the region’s far higher level of dependence. Washington and its allies in the IEA have also tapped strategic petroleum reserves to try to calm prices. Oil markets remain in backwardation, although differential shave narrowed in recent days amid the sanctions moves and announcements for major reserve releases. Brent’s prompt spread was $1.48 a barrel, down from more than $4 a month ago. Investors are also tracking a COVID outbreak in top oil importer China that is hurting energy demand as cities including Shanghai have been placed under lockdown. The country reported more than 20,000 new daily cases Tuesday. Figures from the American Petroleum Institute on Tuesday also showed a 1.1 million barrel increase nationwide, as well as a rise at the key hub in Cushing, Oklahoma. Meanwhile, average retail gasoline prices remain on a record high in March according to data from the American Automobile Association.
Newsletter - April 6, 2022
Newsletter - April 6, 2022
Newsletter - April 6, 2022
Oil / Commodities - Oil erased early losses after the EU tip-toed around sanctions on Russian oil, and investors weighed the outlook for the dollar. WTI crude traded near $102 a barrel after slipping as much as 1.6% to trade below $100 a barrel earlier this week. While the EU will press on with additional penalties against Moscow for the war in Ukraine, including a ban on coal, crude will not yet be targeted. The dollar held gains after jumping on Tuesday as investors digested the prospect of a swift reduction in the Federal Reserve’s debt holdings, part of stepped up monetary tightening to combat soaring inflation. A stronger currency typically makes commodities priced in the currency less attractive. Oil surged by a third in the first quarter as the Russian invasion and backlash from the EU and the U.S. roiled markets. While the U.K. and Washington have moved to bar Russian crude, it is harder for the EU to follow suit given the region’s far higher level of dependence. Washington and its allies in the IEA have also tapped strategic petroleum reserves to try to calm prices. Oil markets remain in backwardation, although differential shave narrowed in recent days amid the sanctions moves and announcements for major reserve releases. Brent’s prompt spread was $1.48 a barrel, down from more than $4 a month ago. Investors are also tracking a COVID outbreak in top oil importer China that is hurting energy demand as cities including Shanghai have been placed under lockdown. The country reported more than 20,000 new daily cases Tuesday. Figures from the American Petroleum Institute on Tuesday also showed a 1.1 million barrel increase nationwide, as well as a rise at the key hub in Cushing, Oklahoma. Meanwhile, average retail gasoline prices remain on a record high in March according to data from the American Automobile Association.