Oil Breaks Four Day Losing Streak On Impediments To Oversupply

Meanwhile, Trump blasts NATO for aiding Russia's war with Ukraine: File Image/Pixabay

Worries over Russian supply risks and a stall in the restart of Kurdish oil exports was enough for traders concerned about global oversupply to raise crude prices on Tuesday by more than $1 per barrel, halting a four day selloff.

After pipeline oil exports from Iraq's Kurdistan region to Turkey were delayed on Tuesday, Brent settled up $1.06 at $67.63 per barrel, while West Texas Intermediate settled up $1.13 at $63.41 per barrel.

The export delay concerned a deal between Iraqi and Kurdish governments to supply about 230,000 barrels per day (bpd) to the global market via Turkey.

Meanwhile, news of U.S. crude and gasoline stocks falling last week did little to reverse the bearish mood that has gripped the oil market for months now; sources said that crude stocks fell by 3.8 million barrels in the week ended September 19, and gasoline stocks declined by just over 1 million barrels.

Distillate inventories rose by 518,000 barrels, and this caused Phil Flynn, senior market analyst at Price Futures Group Inc., to say, "The market will be keeping a close eye on distillate inventories, the soft underbelly of the market," and he added that the build would soften concerns about Russian supplies as Ukraine continues to attack that country’s infrastructure.

For the record, Russia was reportedly considering banning diesel exports for some companies amid the attacks, the latest of which occurred overnight on an oil pipeline that caused gasoline and diesel futures to skyrocket on the Spimex commodities exchange.

The ban would extend until October 31 for producers (who originally were locked into a ban scheduled to last until the end of September), and sources said Moscow was “highly likely” to follow through with their intentions.

Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, remarked, "If products are not able to be exported from Russia, there may be a short-term increase in crude exports as they refine less…but that can only last so long before we see shut-ins."

Meanwhile, U.S. president Donald Trump on Tuesday at the United Nations General Assembly cited China and India as the “primary funders” of Russia’s war in Ukraine, and he derided NATO members still importing Russian crude and LNG more than three years after the invasion began: “Even NATO countries have not cut off much Russian energy, and I wasn’t happy when I found out two weeks ago.”

Trump reiterated his threat to impose a very strong round of powerful tariffs” on Russia if it fails to develop a peace deal with Ukraine, but he stressed the sanctions would only be successful if Europe supported his efforts: “You’re much closer to the city; we have an ocean in between….Europe has to step it up.”