EnergyScan

Chinese Central Bank reverse the oil price downward trend

Oil benchmarks bounced back yesterday: at market close, ICE Brent Front month settled at $104.99/b climbing by +2.6% while the NYMEX WTI closed +3.2% higher at $101.70/b.

Monday prices drop was driven by the prospect of an economic slowdown in China due to zero-Covid strategy with stringent lockdowns, Tuesday turn around was supported by the comment of the Chinese Central Bank in favor of a monetary policy to sustain economic activity.

Even if the prospect of a supply shock from an European embargo on Russian oil is still here, fears are mitigated by the fact that this plan should be imposed gradually and that EIA members continue to put on the market an average of 1.3 Mb a day from emergency stocks. Trafigura, a major trading house, announced it will stop buying oil from Russian national oil company Rosneft by mid-May.

Russia’s decision to stop delivering gas to Poland and Bulgaria should support oil prices, as it fuels the threat that halting oil exports could could be the next step to pressurize even more Ukraine’s allies.

The API weekly report released yesterday night showed that the US crude inventory increased by 4.8Mb, above expectations. Today, EIA status report should show similar stock-build.

This morning, the upward trend is easing but prices are still up, by 0.3% for the WTI and by 0.5% for the Brent.

 

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