U.S. crude stocks increased while distillate and gasoline stocks fell in the week ended - Geojit Financial Services
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Brent Crude hovered above USD100/bbl on supply fears in the wake of Russian invasion in Ukraine. OPEC+ alliance’s reluctance to increase supplies also supported the sentiments.
Global Economy
Russian invasion in Ukraine muddled sentiments in global markets. Most global equity gauges were pressured by Russia - Ukraine crisis last week.
European Union official said it will tighten sanctions on Russia, target Russian ally Belarus with measures and fund weapons for Ukraine to help it defend itself against Russia's invasion.
Russia's political and economic isolation deepened as its forces met stiff resistance in Ukraine's capital.
US Consumer Confidence fell slightly in February to 110.5, after a decrease in January.
US gross domestic product (GDP) increased at an annual rate of 7.0 percent in the Q4 of 2021, as the second estimate showed, following a 2.3 percent growth in Q3.
Crude Oil
Crude oil visit above $100/bbl on Russia-Ukraine
Crisis Crude oil prices have been very volatile in last week as the Russia - Ukraine tensions culminated into Russia’s attack in Ukraine. The crude oil prices were on bullish track owing to the underperformance from OPEC+ alliance. Threats of further disruption in the oil market nudged the prices further higher. Both benchmark variants, WTI and Brent, tested USD 100 per barrel during last week. The WTI futures in NYMEX retreated after testing USD 100 per barrel last week, but seen nearing closer to the same level as on Monday. Meanwhile, Brent crude oil variant hovered above USD 100 per barrel.
Russia-Ukraine Crisis
Russian attack on Ukraine threatened crude oil markets with possible supply shortage as European Union and United States imposed sanctions on Russian crude oil exports. As Russia is the biggest crude oil and Natural Gas supplier to European continent, European energy prices surged after the attack of Russia on Ukraine. On the other hand, Russia is highly reliant on energy exports where crude oil and natural gas contribute almost 30 percent to its GDP.
OPEC+ trims 2022 oil market surplus forecast, stick to present pact
OPEC+ alliance revised down its 2022 forecast crude oil market surplus by around 200,000 barrels per day to 1.1 million bpd. Presently, OPEC nations along with Russia and some other producers nations were limiting crude oil output regardless of increased demand. OPEC+ alliance was undergoing a gradual monthly addition of 400,000 million barrels per day each month since August 2021.
The OPEC+ has reportedly rejected the idea that the Russian attack on Ukraine could be the end of the OPEC+ alliance. Despite the oil prices rallied to USD 100/bbl and the Russian invasion of Ukraine, the OPEC+ alliance is set to rubberstamp another 400,000 bpd increase in monthly production targets by the beginning of March.
Iraq shutdown two oilfields, further curtailing OPEC output
The OPEC member Iraq has temporally shutdown two oilfields with 400,000 barrels per day production capacity. Crude oil output from OPEC was below agreed levels for several months due to outages in Nigeria, Libya etc. that caused further shortages in oil market.
Money managers reduced Net Longs in NYMEX Crude
Money managers reduced Net Longs in NYMEX Crude Money managers reduced their net long positions in US crude futures and options contracts in the week ended February 25, the US Commodity Futures Trading Commission (CFTC) reported.
US Crude stocks up distillate and Gasoline inventories slip
U.S. crude stocks increased while distillate and gasoline stocks fell in the week ended February 18, as per the Energy Information Administration (EIA). Crude inventories increased by 4.515 Million barrels, distillate stocks fell by 0.585 million barrels while gasoline stocks fell 0.582 million barrels. U.S. crude oil imports averaged 6.8 million barrels per day in the same week, increased by 1.0 million barrels per day from the preceding week. Refineries operated at 87.4 percent of their operable capacity in the week ended February 18.
Technical Outlook
Looking ahead, crude oil prices may remain highly volatile amid ongoing Russia - Ukraine crisis. OPEC+ producer groups decision to stick to eh existing plan of gradual supply increase would underpin the crude oil prices in the near term. Additionally, shortage in supplies due to sanctions on Russian crude oil import may also keep the prices higher. Meanwhile, Demand is likely to remain firm due to rebound in global economic growth and easing mobility restrictions in key economies.
NYMEX Apr:Prices may appear firmer if trades sustain above the key psychological resistance of $100 per barrel. Meanwhile, an unexpected drop below $89 may be a reversal signal.
MCX Mar:Strong upward momentum past 7600 may extend the prices higher in the near term. Corrective moves may initiate below 6600 region.
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