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Prices came under pressure due to concerns about a potential drop in energy demand and uncertainty over whether Europe will impose a ban on oil imports from Russia. At the same time, quotes received support due to the reduction of oil reserves in the US by eight million barrels over the past week.
May WTI crude futures closed late Wednesday, rising 19 cents, or 0.2%, to $102.75 a barrel. June futures, the most actively traded contract for that grade, rose 14 cents, or 0.1%, to $102.19 a barrel.
Increased refinery capacity utilization, low imports and high exports have been the main drivers of a massive drawdown (of oil reserves). Large exports are linked to (increased) shipments to Europe, and the situation is unlikely to change in the coming weeks.
The EIA also reported a reduction in gasoline and distillate inventories of 800,000 barrels and 2.7 million barrels, respectively. Forecasts suggested that gasoline inventories fell by 1.2 million barrels and distillate stocks by 1 million barrels, Steves said.
The inventory data “surprised the market, given the massive cuts,” Tyche Capital Advisors’ Tarik Zahir told MarketWatch. The reduction in inventories, along with a potential ban on Russian oil imports to Europe, should help “further rise in prices, and any reduction will be accompanied by purchases.”
OTHER MARKET DRIVERS
Some demand concerns weighed on oil prices on Wednesday, despite the latest data on U.S. oil and petroleum product inventories “showing stronger demand in almost every category,” said Phil Flynn of The Price Futures Group.
Meanwhile, the International Monetary Fund on Tuesday said that the fighting in Ukraine will lead to a significant slowdown in global economic growth this year.
In addition, Germany, where about a third of its oil imports come from Russia, on Wednesday announced its intention to stop buying Russian oil by the end of the year, according to a BBC News report.
Two years ago, the price of WTI oil on the NYMEX moved into negative territory and amounted to -37.63 dollars per barrel. During that period, the oil market was suffering from excess stocks amid the price war between Saudi Arabia and Russia, as well as due to lower demand due to the coronavirus pandemic and contract expiration.
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