Oil Prices Shaken, Here's What Happened!
Oil prices remained stuck near their biggest weekly drop after data showed US fuel inventories rising. Investors are also monitoring the impact of sanctions against two Russian oil giants, which will take effect on Friday. The January WTI contract traded slightly above US$59 per barrel after falling more than 2% on Wednesday, while Brent closed below US$64 per barrel.
US government data showed gasoline and distillate stocks—including diesel—rose for the first time in more than a month. Meanwhile, US crude oil inventories actually fell by 3.4 million barrels, contrary to previous estimates of an increase of around 4.4 million barrels. However, this decline was not enough to change market sentiment, which was already worried about oversupply.
Throughout this year, oil prices have tended to weaken due to expectations of a large global supply surplus. However, geopolitical tensions continue to add a slight risk premium to prices. US sanctions against Rosneft and Lukoil, which began on November 21, have already begun to disrupt oil flows, particularly to India, leaving the market trying to weigh the issue of oversupply and supply disruptions from Russia.
Amid sanctions pressure, several parties have begun eyeing Lukoil's international assets. Reports indicate several potential buyers are lining up, while Exxon Mobil officials reportedly met with the Iraqi Oil Minister to discuss Lukoil's stake in the West Qurna 2 field, which accounts for about 10% of Iraq's oil production. This adds a new dynamic to the global oil landscape.
Russian fuel shipments in the first half of November fell to their lowest level since the invasion of Ukraine, as a combination of sanctions and attacks on refining infrastructure depressed exports. On Thursday morning in Singapore, WTI January crude edged up 0.6% to US$59.59 per barrel, with the December contract hovering around US$59.75, while Brent January crude remained subdued after a 2.1% drop to US$63.51 per barrel on Wednesday. (asd)
Source: Bloomberg.com
