Brent moves upward as supply cuts keep market tight

The front-month ICE Brent contract has moved up by $1.26/bbl on the day, to $87.86/bbl at 09.00 GMT.

PHOTO: Black oil barrel. Getty Images

Upward pressure:

Brent has gained amid concerns over supply disruptions from Russia. Tension between Russia and Ukraine in the Black Sea region has prompted fears of damage to Russian oil shipments.

Ukrainian President Volodymyr Zelenskiy said on Tuesday that Ukraine would be resilient against Russia in the Black Sea region to make sure that its waters were not blockaded, Reuters reported.

“If Russia continues to dominate the Black Sea, outside its territory, blockading or firing at us again, launching missiles at our ports, Ukraine will do the same. This is a just defense of our opportunities, of any corridor,” Reuters quoted Zelenskiy as saying.

Brent’s gain was, “inspired by threats by Ukraine to respond to Russia’s port attacks putting risk not only to global grain supplies but also Russian oil exports,” commented Price Futures Group’s senior market analyst Phil Flynn.

Downward pressure:

US crude inventories increased by 5.9 million barrels in the week that ended 4 August to 445.6 million barrels, according to the US Energy Information Administration (EIA).

“The EIA report was not all bullish as US production rose to the highest levels since March 2020 and crude exports fell to the weakest levels in four weeks,” said OANDA’s market analyst Ed Moya.

Oil traders are now waiting for fresh cues from July Consumer Price Index (CPI) data from the US, which could help to understand the US Federal Reserve's (Fed) future course of action on interest rates.

By Aparupa Mazumder

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