Oil futures contracts had come and gone this Thursday (19), but closed higher. While questions remain about demand, with lockdowns to contain Covid-19 in China, the day was positive for the commodity, supported by the weak dollar and with analysts pondering whether and when there could be an EU embargo on oil from Russia, before the war in Ukraine.
The July WTI contract closed up 2.66% (2.85%) at $109.89 a barrel on the New York Mercantile Exchange (Nymex), and Brent for the same month rose 2.69 %, (US$2.93), at US$112.04 a barrel, on the Intercontinental Exchange (ICE).
Industry news was in focus. Russian Deputy Prime Minister Alexander Novak said his country would ship the oil rejected by Europe to countries in Asia and other regions.
During a forum, Novak said that his country’s oil exports are gradually recovering. Bloomberg also reported that China is negotiating the purchase of cheap oil from Russia to replenish its strategic reserves.
Still in the morning, oil reversed the positive sign and started to fall, in a context of more caution in international markets in general. Further on, there was room for recovery, helped by the retreat of the dollar. The movement in the exchange makes the commodity cheaper for holders of other currencies, supporting purchases.
TD Securities says in a report to clients that the news that China is negotiating to buy Russian oil has put pressure on prices. The investment bank considers, however, that this should not offset all of Russia’s losses with potential EU sanction. The TD also says that oil could receive a boost in the Northern Hemisphere summer, with more people traveling and using fuel.
Julius Baer, in turn, says in a note that the North American oil market appears to be in tight supply, which keeps prices supported. For this bank, the current scenario of releasing strategic stocks, ending production restrictions in some producing countries and growing shale production in the US should make the market able to deal with less oil from Russia.
“We foresee lower prices in the longer term”, maintains Julius Baer, saying that the scenario of very tight supply should not last, while activity in China slows down, with consequences for the demand for the commodity.
Eurasia, on the other hand, believes that an agreement in the European Union to impose an embargo on Russian oil remains likely. But the consultancy believes that will not happen before the end of this month, projecting that all imports would be cut by the end of 2022.
Source: CNN Brasil