Oil Climbs Over 3% On Anxiety Of Russia/Ukraine Talks Stalling

Meanwhile, OPEC is expected to maintain its output despite pressure to compensate for Russia: File Image/Pixabay

A stall in the Russia/Ukraine talks caused blood pressure to rise in the analytical community, which on Wednesday correspondingly resulted in a rise of oil prices after a two day decline.

That, plus a U.S. government report suggesting that high prices may be depressing demand for fuel during a time of year that consumption usually escalates caused Brent to rise $3.22, or 2.9 percent, to settle at $113.45 per barrel, while West Texas Intermediate rose $3.58, or 3.4 percent, to settle at $107.82.

Matt Sallee, a portfolio manager at Tortoise, said, “The broader trend is now set in place that Europe is looking to get off of Russian energy and that’s going to keep the market tighter than it already was for the medium term, not just the short term.”

Poland on Wednesday became the latest European country to declare its intention to wean itself off Russian oil; prime minister Mateusz Morawiecki told media his country plans to “do everything” to stop importing Russian oil by the end of 2022: “This plan is necessary for Europe to finally come to its senses, because when others in Europe were looking at Russia as a business partner, we knew that it uses oil and most of all gas as an instrument of blackmail.”

In 2019, Poland imported about 365,000 barrels per day of crude from Russia, accounting for almost 70 percent of its total crude imports.

As Europe faces politically induced shortages, by contrast in the U.S., the Energy Information Administration reported that gasoline demand fell for the third consecutive week, defying seasonal trends, and this prompted Ed Moya, senior market analyst at Oanda Corp, to warn that “Gas prices at the pump are up 38 percent from a year ago, so it could be the beginning of demand destruction.”

Meanwhile, all eyes are on the Thursday meeting of the Organization of the Petroleum Exporting Countries (OPEC), which, despite being pressured on many fronts to increase output in order to make up for the oil lost to sanctions against Russia, is widely expected to maintain its current rate of production increases.

It was also reported on Wednesday that OPEC during its meeting will consider disregarding oil production estimates provided by the International Energy Agency, a snub that would follow months of strident criticism from both sides.