WTI returns to multi-year highs, Biden expected to announce Russia energy import ban

• Oil has surged higher in recent trade in anticipation of Biden announcing an outright ban on Russian energy imports.
• WTI at one point rose as high as $126.00 again, but has since dropped back to $124.50.

crude oil prices have soared in recent trading in anticipation of US President Joe Biden announcing a total ban on Russian energy imports (oil, liquefied natural gas and coal) in an upcoming speech at 3:45 p.m. GMT. WTI futures from the previous month rose from the $122.00 zone at 13:00GMT to $126.00 at 13:40GMT. Since then, prices have fallen back a bit. At current levels at $12440, WTI is trading daily gains around $4.50 and is eyeing a test of resistance in the form of highs of $127.50 on Monday (WTI’s highest levels since 2008 at the time).

The latest rise brings WTI gains since the beginning of the month to just $30, putting the main US crude oil benchmark on track for its best month-on-month percentage gain since May 2020 and its biggest gain in dollars to date. Some traders have warned that Biden’s announcement of a Russian oil ban may be met with a “sell the fact” reaction, that is, profit-taking that could undo some of the recent intraday gains.

But overall, the fundamentals remain very bullish for crude oil markets. In 2021, the US imported an average of 700,000 barrels per day from Russia, so the country will have to make up the shortfall in some way. Meanwhile, while Europe is currently divided on whether to do the same with a Russian energy import ban, a move by the Americans to go ahead with a ban without them increases pressure on reluctant nations like Germany and Italy.

Goldman Sachs recently raised its forecast for Brent crude in 2022 to $135/barrel (from $98 before) and in 2023 to $115/barrel (from $105 before). The bank explained that the world economy could face one of the “biggest energy supply shocks in history”, given Russia’s key role as a global producer and exporter. With negotiations between the US and Iran reportedly hitting a snag recently amid new demands from Russia, a long-awaited source of crude oil supply seems less likely to return soon.

The US is currently trying to ingratiate itself with an old enemy in the form of Venezuela’s ruling regime in an attempt to find new sources of oil supply, and the talks with the government of Nicolás Maduro were friendly and helpful, according to reports. reports Tuesday. But any big increase in Venezuelan production will take some time. As supply concerns mount, so will concerns over dwindling oil stocks. In that context, the weekly API update on the status of US private inventories will take place at 21:30 GMT.

Additional technical levels