War in Ukraine triggers a rebound

Oil made a strong rebound on Wednesday: ICE Brent front month climbed by +4.9% to $107.51/b while NYMEX WTI front month gained +6.0% to settle at $105.71/b.

Oil market was driven by the tensions related to the war in Ukraine. First as a major pipeline flowing gas from Russia to Europe through Ukraine stopped operating and later on the day as Russia announced sanctions to stop export of product and raw materials to thirty-five Westerns companies.

Prices were also pushed higher as the number of Covid-19 cases in Beijing is starting to go down, and with the report of a lower factory-gate inflation in China that could open the door to a monetary stimulus.

The EIA published its Weekly Petroleum Status Report: crude oil inventory grew by 8mb last week. In fact, it is the release of 7.0mb from the strategic petroleum reserve that explains most of the stock build. However, under low refining capacities and boycotts of Russian supply, products inventory continued to shrink: -3.6mb for gasoline and -0.9mb for fuel oil, fuel oil inventory reach its lowest level since May 2005.

Today, recession fears are going back (see daily Eco comment) and oil market is down: ICE Brent trades -1.4% lower and NYMEX WTI -1.6% lower.