Oil settles little changed as low supplies offset cloudy outlook

Bloomberg

Oil edged higher after a tumultuous session where traders weighed concerns about tight global supply with Germany announcing a ban on Russian oil and a sharp drop in US crude inventories.
West Texas Intermediate settled above $102 on Wednesday after swinging between gains and losses. German Foreign Minister Annalena Baerbock said that the country plans to stop importing oil from Russia by the end of the year, with natural gas soon to follow, Reuters reported. Earlier the US reported crude stockpiles fell 8.02 million barrels last week, the biggest draw since January 2021 and Russia’s oil output declined in April.
Though earlier this week, hawkish comments from the central bank and a downgraded growth forecast from the IMF muddled the future outlook.
“Price action tells us two things: first, macro traders are firmly in control of crude markets at the moment,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management. “Secondly, that the narrative of tight physical markets is stale and may not be able to induce momentum to the upside in the near term.”
Oil rallied to the highest level since 2008 last month in the aftermath of President Vladimir Putin’s invasion of Ukraine. Since then, crude has seen volatile trading as investors gauge moves by the US and UK to ban Russian imports, as well as the impact of major releases from strategic reserves.
“The price of oil continues to hold above $100 per barrel and is likely to remain supported around here,” said Fiona Cincotta, senior financial markets analyst at City Index. “It would take the EU banning Russian oil for the price to really charge higher again and that isn’t looking likely for now.”
Germany previously resisted an EU ban on Russian energy exports before announcing its own phase out on Wednesday. Russian oil accounted for over a third of Germany’s oil imports in 2021.
Kazakhstan — another source of recent oil supply disruption — said it expects its main oil-export route to be fully restored this week. Repairs to moorings at the Black Sea port from which its crude is shipped are “basically completed,” and one of the two moorings affected is due to restart full operations Wednesday, news agency Interfax reported, citing the nation’s energy minister.
Meanwhile, Russia’s Rosneft PJSC surprised traders in Europe and Asia with offers to sell large amounts of crude at speed.
, as well as setting out significant changes to the payment process for at least some of the cargoes.