Crude oil prices rose by more than 5%, at the end of trading today, Monday, March 27 (2023), with fears of a shortage of supply and signs of stability in the financial markets.
Crude prices rose, after Turkey stopped Iraqi Kurdistan oil exports through pipelines, in implementation of a court ruling in favor of Baghdad.
Prices were also supported by comments from Russian President Vladimir Putin over the weekend; This exacerbated geopolitical tensions in Europe, which raised fears of a supply shortage.
Crude oil prices today
At the end of the session, the prices of benchmark Brent crude futures – for May 2023 delivery – rose by about 4.2%, to reach $78.12 per barrel.
The price of US West Texas crude futures – for May 2023 delivery – increased by 5.1%, to $72.81 a barrel, according to data seen by the specialized energy platform.
Crude oil prices ended their trading, on Friday, March 25, down by more than 1% for the second day, but they achieved weekly gains.
During the past week, Brent and West Texas Intermediate crude achieved gains of about 2.8% and 3.5%, respectively, with the easing of tensions in the banking sector.
Oil market analysis
“Oil markets are closely watching sentiment in financial markets, while oil fundamentals remain sidelined,” said Vanda Insights founder of energy markets Vandana Hari.
“We expect most of the price movements in Brent and WTI futures to occur during trading hours in Europe and the United States, which are characterized by a lot of daily volatility,” Hari added.
She indicated that a strong recovery will only be achieved with the complete fading of the banking crisis. Which could take days, if not weeks.
The dollar maintained its gains in the face of crude oil prices, and its strength continued today, Monday; Investors appreciated the regulators’ moves to curb tensions in the global banking system.
A stronger dollar makes commodities denominated in it more expensive for holders of other currencies and tends to affect demand for oil.
Geopolitical tensions
Crude oil prices received some support from comments by President Vladimir Putin that he would deploy tactical nuclear weapons in Belarus; This leads to an escalation of geopolitical tensions in Europe over Ukraine.
NATO criticized Putin, yesterday, Sunday; What he described as his “dangerous and irresponsible” nuclear speech, according to Reuters.
Russian Deputy Prime Minister Alexander Novak said on Friday that Moscow is very close to achieving its goal of reducing crude production by 500,000 barrels per day to about 9.5 million barrels per day.
Data from industry sources and Reuters accounts showed, on Friday, that despite the production cuts; Russia is expected to preserve crude oil exports by reducing refinery production in April.
Russia’s oil product exports have so far been affected more than crude oil exports due to the recent embargo imposed by the European Union; Tons of diesel were hung on ships waiting for buyers.
Analysts said that Russian crude stocks have risen since September last year, and the country is likely to want to avoid further building stocks during the March-June refinery maintenance season.
“If Russia wants to reduce the inventories it has built, production cuts may need to be extended beyond June,” FGE analysts said in a note.
Refineries outages in France
Meanwhile, in France, continued demonstrations and labor strikes have disrupted refineries, lowering demand for crude oil and fuel production.
Investors are also watching China’s manufacturing and services PMIs, which will be released later this week.
Energy services company Baker Hughes said, in a report, on Friday, that oil rigs in the United States rose 4 rigs to 593 last week, and this is the first rise in 6 weeks, while gas rigs stabilized at 162.
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