- WTI has stabilised in the $110 area, down another $1 on the day after Thursday’s $3 drop.
- An easing of CPC pipeline disruption concerns plus the EU’s failure to agree on a Russian oil embargo triggered profit-taking.
Front-month WTI futures have stabilised in the $110 area on Friday, with Thursday’s modest bearish momentum continuing for a second day and prices currently down about $1.0 after the slightly more than $3 drop a day earlier. Supply concerns have eased somewhat in the latter half of the week after news broke of a partial resumption of oil flows through to Kazakhstan’s CPC pipeline. Earlier in the week, authorities had announced that oil flows through the 1.3M barrel per day pipeline had been halted due to the need to repair storm damages.
The supply disruption comes as global oil markets face massive uncertainty owing to Russia’s invasion of Ukraine and subsequent harsh sanctions placed on the Russian economy by Western nations. Speculation at the start of the week had been that the EU would on Thursday, following extraordinary NATO/EU leaders meetings, announce an embargo on all Russian oil imports. But this was not the case, with heavily Russia-energy-import-dependant countries like Germany pushing back against this policy out of fear of causing economic self-harm.
The EU’s failure to implement a wider Russian oil import ban has likely contributed to the further bout of profit-taking in the latter stages of the week. But it seems that traders remain keen to add to long positions in the $110 area. Commodity strategists think that as the impact of the Russo-Ukraine war on Russian oil exports becomes more evident in the coming month, there remains plenty of room for further upside in WTI. The latest remarks from Russian negotiators suggest that a Russo-Ukraine peace deal, which could potentially precede an easing of Western sanctions, is not likely to be forthcoming any time soon.