Home NewsCommodities News Oil jumps as Russia gas flow to Europe falls, EU Russian oil ban looms By Reuters

Oil jumps as Russia gas flow to Europe falls, EU Russian oil ban looms By Reuters

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Oil jumps as Russia gas flow to Europe falls, EU Russian oil ban looms By Reuters

© Reuters. FILE PHOTO: Workers see oil pumps in the background at the Uzen oil and gas field in Kazakhstan’s Mangistau region on November 13, 2021. REUTERS/Pavel Mikheyev

Alex Lawler

LONDON (Reuters) – Oil prices rose nearly 5 percent on Wednesday after plunging nearly 10 percent over the past two sessions, boosted by supply concerns as Russian gas supplies to Europe dwindled and the European Union struggled to secure a ban on Russian oil. Luck support.

Russian gas flows to Europe through Ukraine dropped by a quarter on Wednesday after Kyiv stopped using a major transit route, blaming Russian occupation forces for interference, disrupting exports through Ukraine for the first time since the invasion.

U.S. West Texas Intermediate crude was up $4.50, or 4.4%, at $106.96 a barrel by 1340 GMT, while U.S. West Texas Intermediate was up $4.64, or 4.7% , to $104.04.

“I suspect the disruptions to gas supplies in Ukraine are having a growing impact,” said Jeffrey Halley, an analyst at brokerage OANDA.

The European Union has proposed an embargo on Russian oil, which analysts say would further tighten the market and alter trade flows. The vote requiring unanimous support was postponed as Hungary was close behind.

Oil also rallied on hopes of China’s economic stimulus after China’s factory threshold inflation eased and investors cheered signs of a decline in domestic COVID-19 infections.

Crude prices surged in 2022 as Russia’s invasion of Ukraine fueled supply concerns, with Brent hitting $139 in March, its highest level since 2008. Concerns about growth from China’s coronavirus restrictions and U.S. interest rate hikes contributed to the week’s slump.

Oil remains underpinned by a backdrop of tight supplies, as major producers say part of the reason is a lack of investment. The United Arab Emirates’ energy minister highlighted those concerns on Tuesday.

Oil pared gains after U.S. data showed U.S. inflation slowed less than expected last month, cementing expectations for aggressive rate hikes. [MKTS/GLOB]

On the oil front, the latest US government supply report is due at 1430 GMT. Analysts expect crude inventories to fall slightly, despite a report from the American Petroleum Institute on Tuesday that said inventories rose. [EIA/S] [API/S]

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