Commodities News

Oil Down, Russia Dashes Hopes of Quick End to Ukraine War

By Gina Lee – Oil was down on Wednesday morning in Asia. Worries that falling output in Russia, the world’s second-biggest oil exporter, will tighten markets continue as hopes for a resolution to the war in Ukraine quickly die out.

Brent oil futures edged down 0.13% to $104.50 by 12:18 AM ET (4:18 AM GMT) and WTI futures edged down 0.15% to $100.45. Both Brent and WTI contracts climbed more than 6% in the previous session.

Russian President Vladimir Putin on Tuesday put paid to hopes for an end to the war in Ukraine, which started after Russia’s invasion on Feb. 24.

“Putin said peace talks with Ukraine are ‘at a dead end’, while suggesting the seven-week offensive is going to plan. This raises the spectre of continued risk of supply disruptions in the oil market,” ANZ oil analysts said in a note.

Russian oil and gas condensate production dropped below 10 million bpd on Monday according to the latest data, its lowest level since July 2020. The sanctions imposed on Russia since its invasion of Ukraine and logistical constraints continue to hamper trade, people familiar with the data said on Tuesday.

Russian Minister of Energy Nikolai Shulginov said late on Tuesday the country was prepared to sell oil and oil products to “friendly countries in any price range”, adding that it was focused on ensuring the oil industry continues to function, according to Interfax news agency.

Meanwhile, the news that China is reportedly partially easing some of its COVID-19 lockdowns also raised some hopes for fuel demand.

U.S. fuel demand also looked strong, with data from the American Petroleum Institute (API) reportedly showing gasoline stocks fell by 5.1 million barrels and distillate stocks fell by 5 million barrels.

Tuesday’s U.S. crude oil supply from the API showed a build of 7.757 million barrels for the week ended Apr. 8. Forecasts prepared by had predicted a 1.367-million-barrel build, while a 1.080-million-barrel build was reported during the previous week.

Investors now await crude oil supply from the U.S. Energy Information Administration, due later in the day.

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