Oil continues to decline after a mild rally
Oil declined on Wednesday, reversing a previous gain, as signals of adequate supply and swelling US oil stocks contrasted forecasts for increased demand. This is due to an increase in manufacturing in China, the world’s largest petroleum importer.
The American Petroleum Institute (API) said on Tuesday that oil stocks in the US increased by 6.203 million barrels this week. The total amount of barrels added increased so far this year to over 59 million barrels.
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Tuesday’s oil futures increased by about 3% after the announcement of this data. Nonetheless, both crudes are now in the red on Wednesday. Brent oil slid 0.4%, to $83.04 a barrel, while US benchmark WTI crude declined 0.7%, to $75.
So far, the price cap on Russian oil has no effect
According to Kpler information, Russia’s crude oil majors were able to ship out 7.32 million barrels a day of crude and petroleum products in February. This is implying that the ban on Russian seaborne oil shipping into Europe as well as the maximum price mechanism may have had no effect on the flow of Russia’s crude.
The 7.32 million barrels daily of crude oil shipped February is comparable to the amount exported in December, just before the implementation of crude oil sanctions. Yet, this may be because Russia’s exports were lower in December owing to weather-related interruptions.
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Russia pushed some ships from December into January. As a result, Russia’s petroleum exports surged in January, but have now returned to December levels in February.
US crude oil keeps trading in similar price ranges, with seemingly narrower band. The 200 day SME is also falling, getting closer to the $80 mark. Support continues to hold around $74-$75 with the key resistance being the psychological $80.
WTI 1D chart, source: tradingview.com, author’s analysis