Bloomberg News reports that oil was found extending its run of volatility as continued efforts of the US for curbing costs and concerns over a recession globally were countered for tackling signals of tight supply.
It was observed that West Texas Intermediate oscillated between losses and gains, with the costs vacillating within a $17 band since the end of September. There is a mixed picture that reveals the shape of a future curve. While at the same time, key time spreads indicate the restraints on supply. It was observed that many gauges have softened in recent times to the weakest levels since the end of September.
Crude was found pulling back from the recent high figures while the market remained caught between the double forces of cut in production by the Organization of Petroleum Exporting Countries and the allies aside from the impending threat of a major slowdown in the growth of the economies globally.
In the meantime, it was seen that the upcoming European Union sanctions related to Russian oil exports might have sent shockwaves throughout the tanker market across the globe. In some instances, the same has already caused a few Indian refiners to stop spot purchases before the recent sanctions slated to take effect at the beginning of December.
Setting Floor for Oil
Bloomberg News reports that according to Helima Croft and Michael Tran, associated with RBC Capital Markets as market analysts revealed in a note to the client that risk deployment and liquidity are low, aside from investor positioning that has continued to remain subdued. The inventories globally have been tight, but the macro backdrop across the globe is arguably the weakest encountered in a decade.
The US officials have plans to release 15 million barrels from the emergency reserves of the country and may also be considering doing so more during the winter. This is the final tranche from a White House Program that started in spring. It also seeks replenishment of the emergency stockpiles by purchasing when the WTI is priced at or below $67 to $72 per barrel.
The eighth round of EU sanctions might impact an array of tankers. It states that if the vessel owner transports Russian crude above a price threshold that is agreed upon, their ship might be banned from earning the EU services required for shipping the commodity, like insurance in the future.
Also, adding to the concerns related to the supplies is the restoration of the full oil output in Kazakhstan in the Kashagan fields has been delayed as the operator has been working on finding solutions for gas leaks, as stated by individuals that are familiar with the same. It may be mentioned here that Kazakhstan is the largest producer in Central Asia and one of the main Russian crude alternatives for buyers in Europe.
