13.8 C
New York
Wednesday, May 25, 2022

Oil rises 10% in two days… and records its second weekly loss

- Advertisement -
- Advertisement -

Oil prices closed higher in Friday’s session for the second day in a row, posting a gain of around 10% in two days.

Despite this rise, oil prices posted their second consecutive weekly loss, after a volatile trading week amid struggle to find an alternative to Russian oil in a market suffering from tightness.

Brent crude futures closed up $1.29, or 1.2%, at $107.93 a barrel, a day after rising 9% in the biggest daily percentage gain since mid-2020.

US West Texas Intermediate crude futures also closed up $1.72, or 1.7%, at $104.70 a barrel, adding to an 8% jump in the previous session, according to Reuters.

Both benchmark contracts ended the week down around 4%, after prices moved into the $16 range.

Prices hit their highest level in 14 years nearly two weeks ago, sparking waves of profit-taking ever since.

After a fourth day of talks with Ukraine, Russia said no deal had yet been reached, while some signs of progress emerged earlier in the week.

Oil prices in a week

A frenzied buying spree last week pushed Brent briefly above $139 a barrel amid fears of a disruption to Russian supplies.

Brent is now more than $30 below that level, and analysts warn this reflects strong optimism that the war will soon be over.

The United States and other countries have imposed strict sanctions on Russia since it began its military operation in Ukraine more than two weeks ago.

This obstructed Russia’s oil trade, which amounts to more than 4 to 5 million barrels of crude per day.

Expectations of large fluctuations in oil

“Previous expectations of a ceasefire or agreement between Ukraine and Russia are fading as Russia’s military offensive in key cities continues, suggesting further financial sanctions against Russia,” said Jim Ritterbusch, president of Ritterbusch and Associates, in Galena, Ill.

For his part, Justin Smirk, chief economist at Westpac in Sydney, said: “I still expect more volatility…there is still a lot of uncertainty.”

Volatility throughout the week was led by a supply shortage caused by sanctions against Russia, stalled nuclear talks with Iran, declining oil inventories and fears that demand would be affected by a increase in coronavirus cases in China.

Russian oil losses

The International Energy Agency revealed large oil losses that Russia will suffer during the coming period, including the halting of Russian oil exports and the decline in demand.

And the International Energy Agency said Wednesday that 3 million barrels a day of Russian oil and its products may not reach markets by early April, in the wake of Russia’s war in Ukraine.

In its monthly report, the agency expects “a reduction in total exports of up to 2.5 million barrels per day, of which crude oil represents 1.5 million barrels per day and products represent one million barrels per day. “.

He also expected a decline in Russian domestic demand for oil products.

“These losses will increase if the embargo and public discontent increase,” the Paris-based agency said.

OPEC adheres to its expectations

The Organization of the Petroleum Exporting Countries (OPEC) said on Tuesday that oil demand in 2022 faces challenges from the Russian war in Ukraine and rising inflation amid rising crude prices, but did not change. its forecast of strong demand this year.

In a monthly report, OPEC maintained its view that world oil demand will increase by 4.15 million barrels per day this year and is supposed to reach 100.90 million barrels per day.

The organization said in its annual report that “these forecasts are subject to adjustment in the coming weeks” when there will be “greater clarity” about the geopolitical implications associated with the war in Ukraine.

But the organization said the war in Ukraine and ongoing concerns over COVID-19 are reshaping the global economy, adding that this will have a short-term negative impact on global growth.

Source link

- Advertisement -

New Articles