Oil Unchanged As Putin Lowers Threshold For A Nuclear Strike

Meanwhile, Bloomberg challenges IEA's assertion of bearish demand next year: File Image/Pixabay

A faster than expected resumption of output of Equinor's Johan Sverdrup oilfield in Western Europe following a power outage was apparently enough to deflect focus on a troubling escalation in the war between Russia and Ukraine, the result being that oil prices remained largely unchanged
from the previous session's 3.2 percent rise.

Brent settled up 1 cent at $73.31 per barrel, and West Texas Intermediate settled up 23 cents at $69.39 per barrel.

Brent at $73 is still almost $10 per barrel under where prices were this time last year and $4 under where it started the year.

With regards to Russia-Ukraine, Daniel Hynes, analyst at ANZ Bank, said, "This marks a renewed build up in tensions in the Russia-Ukraine war and brings back into focus the risk of supply disruptions in the oil market."

He was referring to outgoing U.S. president Joe Biden allowing Ukraine to strike Russian forces around Kursk with American-made long-range missiles, which caused Russian foreign minister Sergei Lavrov to describe the attack as a Western escalation and. Russian president Vladimir Putin to lower the threshold for a possible nuclear strike.

Bearish sentiment was fortified on Tuesday by the American Petroleum Institute calculating that U.S. crude oil inventories rose by 4.7 million barrels for the week ending November 8, compared with expectations for a much smaller build of 800,000 barrels, and also compared to a 777,000 barrel draw for the week prior.

Still, according to the latest Energy Information Administration data, gasoline inventories fell this week by 2.4 million barrels compared to last week's 312,000 barrel increase.

Additionally, Bloomberg on Tuesday challenged the International Energy Agency's earlier bearish demand outlook for next year by pointing out the IEA's data showed that global oil inventories declined by about 1.16 million barrels per day (bpd) in the last quarter: "That's an issue because it's significantly bigger than the 380,000 bpd reduction projected by the IEA in its balances….the gap between the two is the equivalent of Poland's daily oil demand, and would add up to about 70 million barrels over the three-month period."

Bloomberg went on to state that what happened with those missing barrels over the quarter could shape how the market looks next year: "Oil bulls argue that the IEA will likely end up revising its balances to catch up with the bigger stock draws, potentially reducing the size of the surplus next year."