Oil climbs from seven-month low as Russia threatens to suspend exports

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

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  • U.S. crude inventories jump nearly 9 million barrels -EIA
  • US assesses need for more oil releases from strategic reserves
  • Britain goes big to ease energy shock, EU meets on Friday
  • Belgium seeks to cap prices on all EU gas imports, not just Russia

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

The price increase came despite a surprise increase in crude oil inventories in the United States, news that the United States was assessing the need to release more crude from strategic reserves and fears that the COVID-19 lockdown extensions 19 China and rising global interest rates will slow economic activity and affect fuel demand. .

U.S. crude inventories jumped nearly 9 million barrels last week due to a combination of increased imports and continued releases from government emergency reserves, the Energy Information Administration said.

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The strong construction compares to analysts’ forecast of a drawdown of 250,000 barrels in a Reuters poll and data from the American Petroleum Institute (API) industry group showing an increase of 3.6 million barrels.

“Most of this oil in this build came from the Strategic Petroleum Reserve. The faster we empty the SPR, the bigger the draws will be going forward,” said Price Futures Group analyst Phil Flynn.

US Energy Secretary Jennifer Granholm said Joe Biden’s administration is assessing the need for further releases of crude oil from the country’s emergency stockpiles. Read more

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

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

“Today’s advance … appears driven primarily by an oversold technical condition that allowed the complex to shrug off an apparently bearish crude stockpile according to the EIA,” analysts at energy consultancy Ritterbusch said. and Associates.

Prices were also supported by 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 has offered to cap Russian gas prices, raising the risk of rationing this winter if Moscow follows through on its threat. Russian Gazprom (GAZP.MM) has already interrupted flows from the Nord Stream 1 gas pipeline.

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

Britain has said it will cap consumers’ energy bills for two years. Read more

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

Chengdu, China has extended the lockdown for the majority of its more than 21 million people to prevent further transmission of COVID-19. Read more

The European Central Bank (ECB) raised key rates by an unprecedented 75 basis points and announced further hikes, prioritizing the fight against inflation even as the bloc’s economy heads into a likely winter recession. . Read more

US Federal Reserve Chairman Jerome Powell said the central bank was “strongly committed” to bringing inflation down and needed to keep going until it did its job. Read more

“Energy traders have mostly priced in China’s COVID shutdowns and demand concerns related to aggressive tightening signals from the ECB and the Fed,” said Edward Moya, senior market analyst at the data and data firm. OANDA analysis.

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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 electricity and natural gas markets.

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