Oil prices rose during Wednesday's trading session. The important thing for the energy market today is the supply of raw materials from Russia and the prospects for demand in China.
The price of June futures for Brent crude oil on London's ICE Futures exchange rose on Wednesday to $105.65 per barrel or 0.63% above the close price of the previous trading session. At the close of trading on Tuesday, these contracts increased by 2.6% to $104.99 per barrel.
June WTI crude futures jumped by 0.41% to $102.12 per barrel in electronic trading on the New York Mercantile Exchange today. On Tuesday, those contracts grew by 3.2% to $101.7 a barrel. At the time of writing this article, WTI slipped slightly to $100.98.
Poland and Bulgaria had previously rejected a new system of payment for gas supplies buying it from Russia exclusively in rubles. Today, supplies of Russian energy resources to these countries have been completely stopped.
As for Germany, Europe's largest economy, Federal Minister for Economic Affairs and Climate Action Robert Habeck stated that his country was ready to refuse supplies of Russian oil, as during the Russian military operation in Ukraine it had managed to noticeably reduce its dependence on it. Habeck said that the share of Russian energy in the total volume of oil imported by Germany decreased from 35% to 12%.
However, the United Arab Emirates for the first time in two years will deliver oil to Europe. According to Reuters, the shipping division of the French TotalEnergies chartered a tanker Moscow Spirit to load 1 million barrels of Murban crude in the port of Jebel Dhanna in Abu Dhabi. The ship will depart for Great Britain as early as the first days of May. More crude from the UAE - such as Murban, Das, and Upper Zakum - will be shipped to Western European countries in the coming months. The new flow is intended to replace supplies of Russian energy that are dropping out of the Western market.
Despite the sanctions, Russia's revenues from oil exports in April have every chance to significantly exceed the indicators of the same period of previous years. This was recently reported by the Foreign Policy. It is important that Russia, against the background of the intentions of Western European countries to refuse Russian oil and gas, is increasing its supplies to other European countries, including China, India, and Turkey. According to Matt Smith, a Kpler expert who tracks oil supplies, oil exports from Russia increased to 3.6 million barrels in April from 3.3 million barrels per day in March.
At the same time, the Chinese authorities announced a significant decrease in the number of new COVID-19 cases in the major cities, Shanghai and Beijing. This news is a major indication that the government's restrictive measures in these two cities will finally be lifted, the citizens will gradually begin to return to normal life, private and business activity will resume, and manufacturing plants and factories will soon be back at full capacity. All of this will not only affect China's achievement of high targets for the development of its economy but will also multiply the global demand for energy resources.
In addition to all the mentioned factors, the publication of data from the American Petroleum Institute (API), which showed that commercial oil inventories in the USA dropped unexpectedly by 4.8 million barrels last week, is also important for the oil price formation. Analysts were expecting a decline of only 2.2 million barrels.
