Author- Mr. Amar – Technical Analyst
Oil prices rose this morning as Ukrainian forces dug in against heavy Russian attacks, while major oil producers reported struggling to produce their allotted quotas under a supply deal. Prices rose after Ukraine’s Deputy Prime Minister Iryna Vershchuk said Monday morning there was no chance the country’s forces would surrender in the besieged eastern port city of Mariupol. With little sign of the tension easing, the focus turned to whether the market would be able to replace sanctions-hit Russian barrels. OPEC+ missed its production target by more than 1 million barrels a day in February, three sources told Reuters, as part of its pact to increase production by 400,000 barrels a day each month as it reverses deep oil cuts.
Crude Oil’s prospects remain obscured behind an opaque fundamental curtain, with headlines and positioning driving insane price action. Sanctions against Russian oil supplies continue to have unforeseen consequences. The International Energy Agency (IEA) reported this week that up to a third of Russia’s April oil exports are at risk. Meanwhile, several OPEC exporting nations have hinted that the cartel should increase production to solve supply problems, with Libya joining the chorus this week. While the supply side is keen to avoid destroying demand, some structural features of the oil market might hold some clues, namely backwardation, and volatility.
Market participants have downplayed the OPEC cartel’s optimism about pumping more oil into global supply to shore up supply-demand imbalances. OPEC has promised to use its additional capacity to produce more oil in the future to help fill oil shortages. In addition, the European Union has said it is considering an embargo on Russian oil against its invasion of Ukraine. The EU community will discuss the sanction at a meeting with US President Joe Biden on Thursday.