AUTHOR: Amar – Technical Analyst
Oil prices rose this morning as concerns mounted over tighter global supplies, and the deepening crisis in Ukraine raises the prospect of tougher Western sanctions against its biggest exporter, Russia. Ahead of the Easter weekend, both contracts rose more than 2.5% on Thursday after news that the European Union could phase out imports of Russian oil. EU governments said last week that the bloc’s executive branch was drafting proposals to ban Russian crude, but diplomats said Germany did not actively support an immediate embargo.
OPEC’s monthly oil market report for March revealed that global oil demand recorded robust growth of 6.5 mb/d in December 2021. The update goes on to say that global oil demand growth in 2022 remains unchanged at 4.2 mb/d for now. d, given the high level of uncertainty and the extreme fluidity of events in recent weeks. However, the report notes that the latest available monthly data for the US implies a sharp increase in oil demand. Expectations of robust demand may push OPEC and its allies to keep the current production schedule. The group plans to adjust the total monthly production for the month of April 2022 upwards by 0.4 mb/d.
It can be predicted that the oil market is likely to maintain a bullish trend this week, with limited additional supplies coming from major oil producers to offset lower inflows from Russia. Rising US heating oil prices were also behind the recent rally as expectations grew that the US oil market would tighten on rising export demand to Europe. However, despite labour and supply chain constraints, oil production volumes are being revised upwards, according to industry experts, as higher prices drive more drilling and completion activity.