Oil advances on concerns over Russia and supply disruption in Libya

Storage tanks are seen at Marathon Petroleum’s Los Angeles refinery, which processes domestic and imported crude oil into California Air Resources Board (CARB), gasoline, diesel fuel and other petroleum products, in Carson, California, USA , March 11, 2022. Photo taken with a drone. REUTERS/Bing Guan

NEW YORK, April 21 (Reuters) – Oil prices rose on Thursday on worries about tight supplies as the European Union (EU) considers a possible ban on Russian oil imports that would further restrict the world oil trade.

Brent crude futures settled at $1.53 to close at $108.33 a barrel, after earlier hitting a high of $109.80. U.S. West Texas Intermediate (WTI) crude futures ended up $1.60, or 1.6%, at $103.79, after hitting an earlier high of $105.42.

Buyers also reacted to ongoing disruptions in Libya, which is losing more than 550,000 barrels a day of oil production due to blockages at key export fields and terminals. Read more

Brent has gained nearly 8% over the past seven trading days, but the recovery has been slow and furious, unlike the frenzy that accompanied the moves in late February when Russia invaded Ukraine. and in mid-March as well.

“It’s not as easy a trade as it was a few weeks ago,” said Phil Flynn, principal analyst at Price Futures Group. “You have to risk more, and maybe that’s on purpose with these hedge funds and algo funds trading more.”

The market sold off somewhat after US Treasury Secretary Janet Yellen said on Thursday that the EU should be careful about a comprehensive ban on Russian energy imports as it would likely lead to a spike in oil prices . Read more

The EU is still considering such a ban on Russia’s invasion of Ukraine, which Moscow calls a “special military operation” to demilitarize its neighbor. Read more

Flynn said the market is pricing in the possibility that down the road, slower growth or additional supply could undermine the bullish case for oil. In the meantime, however, the market remains tight. U.S. inventories of distillate fuels are near a 14-year low, the U.S. Department of Energy said on Wednesday.

Traders also cited comments from Federal Reserve officials that suggested an aggressive path to raise US interest rates in the coming months. This could dampen growth and reduce demand for energy products.

U.S. crude exports hit more than 4 million barrels a day last week, partly offsetting sanctions-hit Russian crude losses from the United States and European countries.

The oil market remains tight, with the Organization of the Petroleum Exporting Countries and its Russia-led allies, collectively known as OPEC+, struggling to meet production targets and with US crude inventories falling sharply in the week ended April 15.

“With only two countries in the OPEC+ alliance holding significant spare capacity, Saudi Arabia and the United Arab Emirates, the group is sticking to a cautious approach to undo pandemic-related production cuts,” said UBS in a note.

Demand prospects in China continue to weigh on the market as the world’s largest oil importer slowly eases tight COVID-19 restrictions that have hit manufacturing activity and global supply chains. Read more

Reporting by David Gaffen Additional reporting by Noah Browning in London, Mohi Narayan in New Delhi and Sonali Paul in Melbourne Editing by Mark Potter and Paul Simao

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