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Crude Oil Stable as China Relaxes COVID Rules

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Oil

Global crude oil prices appeared stable on Tuesday morning as the market balanced risk sentiment with supply concerns and the prospect of higher demand as China relaxes its COVID curbs.

Brent crude, against which Nigerian oil is priced, dipped 38 cents, or 0.3% to $119.13 barrel at 10.30 am Nigerian time. U.S. West Texas Intermediate (WTI) crude dipped 25 cents or 0.2% at $118.25 a barrel.

“Risk sentiment is responsible for the drop, with European equity markets negative,” said UBS analyst Giovanni Staunovo.

U.S. State department authorisation for Eni and Repsol to start shipping Venezuelan crude to Europe from July to replace lost Russian barrels has also weighed on prices in recent days. read more

But analysts expect the sluggish price action to be short-lived as Beijing and commercial hub Shanghai have been returning to normal in recent days after two months of painful lockdowns to stem outbreaks of the Omicron variant.

Further bullish sentiment followed analyst doubts that last week’s production policy decision by the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, would alleviate tight supply.

The group’s decision to bring forward oil production rises to 648,000 barrels per day (bpd) in July and August are unlikely to improve the global oil balance as members struggle to achieve quota increase and as the rise is lower than the loss of Russian crude oil, analysts said. This is probably acknowledged by Saudi Arabia itself, PVM Oil’s Tamas Varga said.

Top oil exporter Saudi Arabia raised the July official selling price (OSP) for its flagship Arab light crude to Asia by $2.10 from June to a $6.50 premium over Oman/Dubai quotes.

The quota increase from OPEC+ also fails to address the shortage in oil products, analysts said.

“Refining margins globally suggest that demand for petrol and diesel remain in heavy demand, with the refining logjam in refined products backstopping crude prices,” Jeffrey Halley, a senior Asia Pacific market analyst at OANDA.

Elsewhere, U.S. crude inventories likely fell last week, while gasoline and distillate stockpiles were seen up, a preliminary Reuters poll showed on Monday.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Brent Crude Approaches $86 Following Moscow Attacks

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Brent crude oil - Investors King

Amid escalating geopolitical tensions following the devastating terrorist attacks in Moscow, global oil markets rose with Brent crude oil hitting a $86 price level.

The tragic events in the Russian capital, which claimed the lives of over 130 innocent civilians, sent shockwaves through international communities and rattled energy markets already grappling with supply uncertainties.

Speculation surrounding the attacks, claimed by the Islamic State but with hints of potential Ukrainian involvement from Russian President Vladimir Putin, intensified concerns about potential disruptions to oil supplies.

Also, ongoing drone strikes by Ukraine targeting Russian infrastructure further exacerbated worries about the stability of crude oil production and refining capabilities in the region.

The mounting geopolitical unrest in key oil-producing regions has injected a sense of urgency into the market, with investors closely monitoring developments for potential impacts on global supply and demand dynamics.

Despite recent fluctuations, crude oil is poised for a third consecutive monthly gain, buoyed by efforts from the OPEC+ alliance to maintain production cuts and bolstered by tightening US sanctions on Russian energy exports.

The bullish sentiment is further supported by positive commentary on the broader commodities outlook, with central banks signaling potential interest rate reductions to stimulate economic growth, thus underpinning industrial and consumer demand for raw materials.

Analysts remain cautiously optimistic about the trajectory of oil prices, citing a delicate balance between supply risks and supportive macroeconomic factors amidst the backdrop of geopolitical turmoil.

As Brent crude inches closer to the $86 threshold, market participants brace for continued volatility amid unfolding geopolitical developments.

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Indian Refiners Shun Russian Crude Carried by Sovcomflot Tankers Amidst US Sanctions

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Crude Oil - Investors King

Indian refiners have taken a bold stance by refusing to accept Russian crude oil carried on PJSC Sovcomflot tankers, citing stringent US sanctions.

This decision marks a significant shift in India’s energy strategy and underscores the profound impact of global politics on the oil trade.

The move comes in the wake of heightened scrutiny on Sovcomflot tankers following sanctions imposed by the US Treasury’s Office of Foreign Assets Control.

Designating Sovcomflot and identifying specific crude oil tankers, the US has intensified its efforts to clamp down on entities linked to Russia, particularly in the aftermath of the Ukraine invasion.

Indian Oil Corp., Bharat Petroleum Corp., Hindustan Petroleum Corp., Mangalore Refinery & Petrochemicals Ltd., and Nayara Energy Ltd. have all halted the acceptance of cargoes carried on Sovcomflot vessels.

This unified action underscores the severity of the situation, with refiners diligently scrutinizing tanker ownership to ensure compliance with sanctions.

The repercussions of this decision are reverberating throughout the oil market, leading to disruptions in the supply chain and altering trade dynamics.

With fewer tankers available to transport Russian crude, the pricing landscape has undergone a significant shift, with discounts narrowing to compensate for higher freight costs.

Despite the challenges posed by sanctions and supply chain disruptions, India remains a key player in the global oil market.

However, the decision to shun Russian crude on Sovcomflot tankers reflects a strategic recalibration in response to evolving geopolitical realities, underscoring the complex interplay between politics and energy security on the world stage.

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