Brent moves higher as supply risks linger
The front-month ICE Brent contract has gained by $0.48/bbl on the day, to trade at $64.37/bbl at 09.00 GMT.
IMAGE: Oil storage tanks. Getty Images
Upward pressure:
Oil prices have risen as supply risks have emerged as the dominant driver of the global oil market.
The European Union’s (EU) renewed hardline stance on Russia has revived concerns about the possibility of tighter sanctions on the OPEC+ group.
Top EU diplomat Kaja Kallas remarked yesterday that Moscow’s aggression against the EU, including an explosion in Poland, should be treated as terrorism, Bloomberg reported.
Poland's Prime Minister Donald Tusk said on Tuesday that foreign intelligence services orchestrated an explosion on a railway line used to transport aid to Ukraine. Later, spokesman Jacek Dobrzynski said that "everything points to them being Russian special services", according to a BBC report.
“Language markets interpreted [Kallas’ comments] as raising the odds of further sanctions,” VANDA Insights’ founder Vandana Hari said.
These remarks come as the US sanctions on Russia’s two largest oil producers – Lukoil and Rosneft – are set to take effect shortly.
“Market participants appear more concerned about supply risks than the odds of a surplus going forward,” two analysts from ING Bank remarked.
Downward pressure:
The latest crude stocks report by the American Petroleum Institute (API) has put some downward pressure on Brent’s price today.
US crude oil inventories gained by 4.4 million bbls in the week ending 14 November, according to the API.
This was the third straight weekly build in inventories. A build in US crude stocks typically indicates lower demand for oil and can put downward pressure on Brent.
“The market will be more focused on the release of the widely followed US Energy Information Administration (EIA) inventory numbers later today,” ING Bank’s analysts said.
By Aparupa Mazumder
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