The oil market is undergoing a severe production problem
One analyst cautions that the oil market is experiencing a significant production problem, even as prices momentarily fall due to Covid lockdowns in China.
From a long-term perspective, something significantly more severe is happening — and that is happening in Russia.
Exxon (XOM), Total (TTE), and BP (BP) are departing Russia, leaving their assets behind. According to the analyst, the loss of output will pressure Russia’s leader, Vladimir Putin, to halt the conflict in Ukraine.
Russia’s revenue is heavily reliant on oil sales.
Energy prices gained on Tuesday, extending previous session gains. The European Union firmed up plans to strengthen sanctions on Russia this week, with Germany suggesting it was willing to support an emergency embargo on Russian oil.
At 0234 GMT, Brent oil futures were up 25 cents, or 0.2 percent, to $107.83 a barrel, while West Texas Intermediate (WTI) crude futures were up 17 cents, or 0.2 percent, to $105.34 a barrel.
The ban may exempt Hungary and Slovakia, both of which rely substantially on Russian petroleum.
Tight gasoline product supplies increase demand for crude, which helped lift Brent and WTI by more than 40 cents following a tumultuous day on Monday. Traders will be paying particular attention to inventory data from the United States, with the American Petroleum Institute industry group reporting stocks for the week ending April 29 on Tuesday, followed by official data from the Energy Information Administration on Wednesday.
On average, five analysts polled by Reuters predicted US crude stocks to fall by 1.2 million barrels in the week ending April 29.
They also anticipated a 1.2 million barrel drop in distillate inventories, including diesel and heating oil, and a 300,000 barrel drop in gasoline inventories.
