Oil rises after IEA warns of supply shortages

Industrial plants of the oil refinery PCK Raffinerie in Schwedt/Oder
Industrial plants of the oil refinery PCK Raffinerie are pictured on March 7, 2022 in Schwedt/Oder, Germany. The company receives crude oil from Russia through the Friendship pipeline. REUTERS/Hannibal Hanschke

March 17, 2022

-Oil prices rose on Thursday after the International Energy Agency (IEA) said markets could lose three million barrels per day (bpd) in Russian crude and refined products from April.

The loss in supply would be far larger than an expected drop in demand of a million bpd per day triggered by higher fuel prices, the IEA said in a report on Wednesday.

Benchmark Brent crude futures were up $1.8, or 1.9%, to $99.86 a barrel by 0408 GMT after falling for three consecutive trading sessions.

USWest Texas Intermediate (WTI) crude was up $1.6, or 1.7%, to $96.67 a barrel.

Both contracts were lower the day before after US crude inventories surged stronger-than-expected and signs of progress in Russia-Ukraine peace talks.

“Market enthusiasm to trade the geopolitical fallout is fading, helping to squeeze some premium bubbles out of oil prices. It’s time to reevaluate various factors,” said Wang Xiao, senior researcher at Guotai Junan Futures Co.

Prices fell in the previous session on news that US oil inventories rose 4.3 million barrels to 415.9 million barrels in the week ended March 11, according to the US Energy Information Administration, beating expectations of analysts for a drop of 1.4 million barrels.

“Questions about how much Russian oil will continue to falter and uncertainty about how bad the crude demand destruction will get will make energy markets nervous,” wrote Edward Moya, a senior market analyst at OANDA, in a note.

The oil market largely shrugged off a move by the US Federal Reserve to raise interest rates by a quarter of a point as expected on Wednesday.

Market sentiment was also somewhat boosted after China pledged measures to boost financial markets and economic growth, while a drop in new COVID-19 cases in China raised hopes authorities could lift travel bans and allow factories to produce in cities under lockdown to resume.

(Reporting by Liz Hampton and Muyu Xu; Editing by Cynthia Osterman and Kim Coghill) Oil rises after IEA warns of supply shortages


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