Prices ease in the hope of an end to the crisis with Russia

Crude oil prices eased quite significantly following the French President’s visit to Russia. There was nothing concrete, however, other than Vladimir Putin’s reported promise not to escalate the crisis with Ukraine on his own initiative. The $3-4/b drop in the price of Brent gives an idea of the geopolitical risk premium currently being built in. That said, the price of Brent is still above $90/b.

The market remains fundamentally tight. The API figures suggest a further decline in US inventories, both for crude and petroleum products. Weekly EIA figures will be released today. 

We mentioned the likely rebound in Chinese demand yesterday. Also in India, refineries are running at full capacity with utilization rates 15 points higher than last summer. On the other hand, in its latest monthly report, the EIA has revised upwards its oil production forecast in the US to almost 12mb/d this year and 12.6mb/d in 2023 (against 12.4mb/d previously).