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Oil edges up from seven-month low as Russia threatens export halt

A view shows the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS / Tatiana Meel

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  • US crude stocks jump by nearly 9 million barrels – EIA
  • US weighing need for more oil releases from strategic reserves
  • Britain goes big to ease energy shock, EU meets on Friday
  • Belgium seeks price cap on all EU gas imports, not just Russian

NEW YORK, Sept 8 (Reuters) – Crude prices edged up about 1% on Thursday after dropping to a seven-month low in the prior session as some technical traders bought the dip and Russia threatened to halt oil and gas exports to some buyers.

That price increase came despite a surprise build in US crude inventories, news that the United States was weighing the need for more crude releases from strategic reserves and concerns China’s COVID-19 lockdown extensions and rising global interest rates would slow economic activity and hit fuel demand .

US crude stockpiles surged by nearly 9 million barrels last week due to a combination of increased imports and ongoing releases from government emergency reserves, the Energy Information Administration said.

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The hefty build compares with the 250,000-barrel draw analysts forecast in a Reuters poll and data from American Petroleum Institute (API) industry group showing a 3.6 million barrel increase.

“Most of that oil in that build came from the Strategic Petroleum Reserve. The quicker we empty out the SPR, the bigger the draws are going to be in the future,” said Phil Flynn, an analyst at Price Futures Group.

US Energy Secretary Jennifer Granholm said Joe Biden’s administration was weighing the need for further releases of crude oil from the nation’s emergency stockpiles. read more

Brent futures rose $ 1.15, or 1.3%, to settle at $ 89.15 a barrel, while US West Texas Intermediate (WTI) crude rose $ 1.60, or 2.0%, to settle at $ 83.54.

On Wednesday, both benchmarks dropped more than 5% to close at their lowest levels since mid-to-late January, putting WTI into technically oversold territory for the first time in a month.

“Today’s advance … appears motivated mainly by an oversold technical condition that allowed the complex to shrug off a seemingly bearish crude stock build for the EIA,” analysts at energy consulting firm Ritterbusch and Associates said.

Prices also drew support from Russian President Vladimir Putin’s threat to halt oil and gas exports if price caps are imposed by European buyers. read more

The European Union proposed capping Russian gas prices, raising the risk of rationing this winter if Moscow carries out its threat. Russia’s Gazprom (GAZP.MM) has already halted flows from the Nord Stream 1 gas pipeline.

Belgium’s energy minister proposed a cap on wholesale gas prices rather than just Russian imports. read more

Britain said it will cap consumer energy bills for two years. read more

Concerns about the health of the global economy and expectations of falling fuel demand led to sharp oil price falls in the previous session.

China’s Chengdu extended a lockdown for a majority of its more than 21 million residents to prevent further transmission of COVID-19. read more

The European Central Bank (ECB) raised its key interest rates by an unprecedented 75 basis points and signalled further hikes, prioritizing the fight against inflation even as the bloc’s economy is heading for a likely winter recession. read more

US Federal Reserve Chairman Jerome Powell said the central bank is “strongly committed” to bringing down inflation and needs to keep going until it gets the job done. read more

“Energy traders have mostly priced in the Chinese COVID shutdowns and demand concerns from aggressive tightening signals by the ECB and Fed,” said Edward Moya, senior market analyst at data and analytics firm OANDA.

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Reporting by Scott DiSavino in New York Additional reporting by Ahmad Ghaddar in London and Muyu Xu in Singapore Editing by Marguerita Choy, Matthew Lewis and Deepa Babington

Our Standards: The Thomson Reuters Trust Principles.

Scott Disavino

Thomson Reuters

Covers the North American power and natural gas markets.

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