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Oil slides 2% as EU fails to boycott Russian crude

Commodities Mar 24, 2022 03:11PM ET
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© Reuters. FILE PHOTO: A general view shows a local oil refinery behind residential buildings in Omsk, Russia February 10, 2021. REUTERS/Alexey Malgavko/File Photo
 
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By Scott DiSavino

NEW YORK -Crude prices slid 2% on Thursday after the European Union (EU) could not agree on a plan to boycott Russian oil and on reports that exports from Kazakhstan's Caspian Pipeline Consortium (CPC) terminal could partially resume.

European Union leaders are set to agree at a two-day summit starting on Thursday to jointly buy natural gas as they seek to cut reliance on Russian fuels, with some saying they would not comply with Moscow's demand to buy oil and gas using roubles.

But EU countries remain divided on whether to sanction Russian oil and gas directly, a move already taken by the United States.

Brent futures fell $2.57, or 2.1%, to settle at $119.03 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $2.59, or 2.3%, to settle at $112.34.

On Wednesday, both benchmarks closed at their highest since March 8.

Russia's invasion of Ukraine on Feb. 24 has prompted the EU to pledge to slash reliance on Russian fossil fuels by hiking imports from other countries and quickly expanding renewable energy.

The North Atlantic Treaty Organization (NATO) offered Kyiv new military assistance and assigned more troops to its eastern flank as London and Washington imposed fresh sanctions on Moscow.

But without an EU embargo of Russian oil, Commerzbank (DE:CBKG) analyst Carsten Fritsch said sanctions were unlikely to have a major impact on the oil market.

As the EU remains split on imposing outright bans on Russian oil, analysts at Rystad Energy said India and China could import more Russian barrels to boost their refined products output.

The United States and its allies, meanwhile, were discussing a possible further coordinated release of oil from storage to help calm oil markets.

Also weighing on crude prices, the dollar strengthened for the fourth time in five sessions. A stronger dollar makes oil more expensive for holders of other currencies.

Oil prices fell further after ICE (NYSE:ICE) increased margins for May Brent crude futures by 19% effective March 25, the third margin update this year.

Trading was volatile for both crude benchmarks, which rose to fresh two-week highs early in the session on lingering supply concerns including early reports that crude export loadings were suspended at Kazakhstan's CPC terminal following storm damage.

But four sources familiar with the matter said oil exports via the CPC pipeline will partially resume on Thursday.

"Reports that the CPC pipeline would return was a big relief to the market," said John Kilduff, partner at Again Capital in New York, noting supply disruptions from pipeline shutdowns or Russian sanctions are "a big problem because we can't make up those barrels."

Crude prices drew some support from the drop in U.S. crude in the Strategic Petroleum Reserve (SPR) to the lowest level since May 2002.

U.S. crude at the Cushing storage hub in Oklahoma fell in the week to March 22, traders said, referring to a report from data provider Genscape. U.S. government data has shown stockpiles there rising for the past two weeks.

Canada said it has capacity to increase oil and natural gas exports by up to 300,000 barrels per day (bpd) in 2022 to help improve global energy security.

Oil slides 2% as EU fails to boycott Russian crude
 

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Comments (13)
Nero Eino
Nero Eino Mar 24, 2022 4:21PM ET
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Germany is Putin's puppet, crying for oil and gas
Jim Morrison
Jim Morrison Mar 24, 2022 4:12PM ET
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hahaha. green energy is green for Russia!
JonMichael Patrick
JonMichael Patrick Mar 24, 2022 2:19PM ET
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shame. idiots
Robert Murphy
Robert Murphy Mar 24, 2022 12:05PM ET
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At this rate, the Fed isnt needed. High oil prices will *****demand for literalu everything else.
Robert Murphy
Robert Murphy Mar 24, 2022 12:03PM ET
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Good to know the strategic stockpile will be down to the 500 million barels sooner than I even thought possible. Keep opening it up so Opec can out us in an embargo when we are dry. Don’t open up Texas and Alaska for drilling, keep going to dictators begging for oil. Makes sense if you want crude to top $160
Robert Murphy
Robert Murphy Mar 24, 2022 11:57AM ET
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Good to know we will be down to the 500 million barels faster than I even thought posible. Idiots.
Todd Gray
Todd Gray Mar 24, 2022 11:37AM ET
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An iran deal will provide a continual stream of middleast instability that will will have to listen to on our TV's, and which will perpetually disrupt our lives for many years to come. It seems everything the liberals do provides nothing but an increase of instability within our own country.
Benjamin USA
Benjamin USA Mar 24, 2022 11:37AM ET
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Great input, thanks Todd!!
Kelly Mayer
Kelly Mayer Mar 24, 2022 3:22AM ET
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How many times the Iran deal is already price in? At least twice
ali mohammadi
ali mohammadi Mar 24, 2022 2:51AM ET
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As Iranians, we do not want an agreement.US sanctions have had no effect and have only boosted the prosperity of many companies inside Iran.
Don Shula
Don Shula Mar 24, 2022 2:47AM ET
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America only gets about 6% of it oil from Russia… instead of talking to Iran, lets start turn our drills on & in the meantime use those emergency supply reserves.
 
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