- WTI nearly hit $120 on Tuesday amid a cocktail of bullish catalysts, though has since dropped back towards $118.
- The EU agreed to phase out 90% of Russian oil import by the year’s end.
- China lockdown easing/Covid-19 infection decline and the incoming peak driving season in North America and Europe are further bullish drivers.
A cocktail of bullish factors supported global oil prices on Tuesday, with front-month WTI futures coming within a whisker of hitting the $120 per barrel mark earlier in the session before backing off somewhat following a risk-averse start to the final trading day on Wall Street of the month. At current levels just above $118, WTI is still trading with gains of around $0.50, having on Monday broken above key support in the form of the late March highs in the $116s.
Market commentators cited expectations for rising demand in the coming months as North America and Europe enter the peak summer driving season plus positive developments regarding the Covid-19 situation in China (lockdown easing continues as new infections in the country fell back under 100 for the first time since early March). Probably the most important development underpinning prices right now, however, is the news early on Tuesday that EU 27 leaders came to an agreement on a Russian oil embargo.
Seaborne crude oil imports from Russia will be completely phased out within the next six months and, while oil delivered via pipeline is exempt from sanctions to placate land-locked Hungary, other EU nations that import a lot of Russian crude oil via pipeline have pledged to end purchases by the end of the year. In sum, the bloc will have phased out 90% of its purchases of Russian crude by the end of the year, a devasting blow to the Russian energy industry.
OPEC+ are scheduled to meet later in the week and sources on Monday said that, despite the EU’s (widely anticipated) ban on Russian oil imports, they would stick to their existing policy of steady 432K barrel per day increases in output quotas each month. The group's slow approach to increasing output at a time when many of its smaller producers are struggling to keep up and Russian output is collapsing from pre-Ukraine invasion levels has contributed to a significant tightening of global oil markets.
Highlighting this tightness, commodity analysts on Tuesday pointed to a continued steepening of the current contango of the oil futures curve. The premium to buy Brent crude futures for delivery in August versus six months later rose to a fresh nine-week high of near $15.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended content
Editors’ Picks
AUD/USD corrects toward 0.6850, awaits US PCE Price Index
AUD/USD is falling back toward 0.6850 in Friday's Asian trading, reversing from near 19-month peak. A tepid US Dollar bounce drags the pair lower but the downside appears called by the latest Chinese stimulus measures, which boost risk sentiment ahead of US PCE data.
USD/JPY pares gains toward 145.00 after Tokyo CPI inflation data
USD/JPY is paring back gains to head toward 145.00 in the Asian session on Friday, as Tokyo CPI inflation data keep hopes of BoJ rate hikes alive. However, intensifying risk flows on China's policy optimism support the pair's renewed upside. The focus shifts to the US PCE inflation data.
Gold price consolidates below record high as traders await US PCE Price Index
Gold price climbed to a fresh all-time peak on Thursday amid dovish Fed expectations. The USD languished near the YTD low and shrugged off Thursday’s upbeat US data. The upbeat market mood caps the XAU/USD ahead of the key US PCE Price Index.
Bitcoin surges past $65,000, sets sights on $70,000
Bitcoin broke above its consolidation zone, signaling a potential bullish move ahead. At the same time, Ethereum is finding support at a key level, hinting at an upcoming rally. In contrast, Ripple consolidates between its crucial levels, indicating a period of indecision among traders.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.