By Barani Krishnan
Investing.com — The woes for the oil bulls seem limited as long as Russia continues to have trouble getting its crude out.
Crude prices rebounded from Tuesday’s lows after the Energy Ministry in Moscow warned that oil exports from Russia and Kazakhstan through the Caspian Pipeline Consortium, or CPC, could fall as much as 1 million barrels per day due to storm-damaged berths. Pavel Sorokin, Russia’s deputy energy minister, said repair work could take up to two months.
The CPC is a joint venture responsible for transporting Caspian oil from the Tengiz field to the Novorossiysk-2 sea terminal on Russia’s Black Sea coast. It is also a major export route for oil from the Kashagan and Karachaganak fields. The pipeline ships about 1.2 million barrels per day, or 1.2% of global oil demand.
With sanctions and other restrictions on Russia already stripping global oil markets of around 3 million barrels a day of supply, the drop in CPC flows has further weighed on the nerves of oil traders.
Crude prices, which had fallen as much as 2% earlier on Tuesday due to Europe’s indecision in implementing a US-style ban on Russian crude, recovered from lows in the CPC news session.
“The CPC was in a very gray area since the start of the Russian invasion of Ukraine and this story only adds to the alleged global oil supply shortfall resulting from Russia’s misfortunes,” John said. Kilduff, founding partner of New York-based energy hedge fund Again Capital. .
The benchmark for U.S. crude, or WTI, was 36 cents, or 0.3%, at $111.76 a barrel. WTI hit a session low of $107.12 earlier. He had gained around 17% in the previous three sessions.
Oil traded in London, the global benchmark for oil, stood 14 cents, or 0.1%, at $115.48 a barrel, above the session low of $112.66. Like WTI, Brent had gained 17% between Wednesday’s settlement and Monday’s.
Brent and WTI fell as much as 2% earlier on Tuesday as European Union foreign ministers disagreed on whether and how to impose sanctions on Russia’s energy sector .
The EU and its allies have already imposed heavy measures against Moscow, including freezing the assets of its central bank. But targeting Russian energy exports, as the US and Britain have done, is a choice that divides the EU at 27, which depends on Russia for 25% of its oil and 40% of its gas. .
“The oil market remains very tight and completely obsessed with every development with the war in Ukraine,” said Ed Moya, analyst at online trading platform OANDA.
Aside from the Russia-Ukraine narrative, traders were on the lookout on Tuesday for weekly U.S. oil inventory data, expected after market settlement by the American Petroleum Institute, or API.
The API will publish around 4:30 p.m. ET (8:30 p.m. GMT) a snapshot of the US Crude, Gasoline and Distillates closing balances for the week ended March 18. The numbers serve as a precursor to official inventory data on the same due from the US Energy Information Administration on Wednesday.
For the week ended March 18, analysts tracked by Investing.com expect the EIA to report production of 114,000 barrels, in addition to the 4.35 million production it reported for the week. prior to March 11.
On the front, the consensus expects a drawdown of 1.99 million barrels out of the 3.62 million barrels consumed the previous week.
With , we expect a drop of 1.39 million barrels against 332,000 the previous week.