WTI rises to $106.00, eyeing recent highs near $110

• Oil prices are sharply higher on Wednesday, with a focus on EU proposals to ban imports of Russian oil.
• WTI is trading up $3.0 towards $106.00 and is targeting recent highs in the $108-$110 zone.

oil prices have risen sharply on Wednesday in the wake of a European Commission proposal to phase out all imports of Russian oil within six months, end imports of refined products by the end of the year and kick Russia’s top bank out of the country. SWIFT global payment system. EU nations will have to unanimously agree on the proposal for it to come into force and some smaller nations (Hungary, Bulgaria, Slovakia) have been making a fuss, meaning no final deal was reached on Wednesday.

But envoys from each of the 27 EU nations are due to meet again on Thursday and the market’s base case is that a deal will be done soon. The EU proposal will also bar EU companies from providing shipping, financing or insurance services to help transport Russian crude around the world, a move analysts say would have a “chilling” effect on trade. of Russian crude oil, the West will be able to increase pressure on countries that still buy grades of Russian crude oil, perhaps with the threat of sanctions.

As commodity markets brace for further declines in Russian oil production in the coming months as the latest EU sanctions take effect in the coming months, prior month WTI futures are trading firmly up front. At current levels of $106.00 per barrel, WTI is slightly over $3.00 higher on the day, with oil prices for now ignoring the mixed news coming out of China regarding lockdowns there as well as more evidence of global growth problems. WTI bulls are eyeing a test of recent highs in the $108-$110 area.

Local media have reported that Beijing will extend lockdown measures indefinitely as the city continues to deal with rising Covid-19 infection rates, however the situation in Shanghai continues to improve, with much of the city now out. lockdown as case rates decline. The chilling impact on the global economy of recent Chinese lockdowns was on display on Wednesday with the release of IHS Markit’s global manufacturing PMI survey, which fell into contractionary territory for the first time since June 2020.

Looking ahead, official weekly US crude oil inventory figures will be released at 15:30 BST after private weekly API inventory data showed a larger-than-expected decline in major oil stocks. crude on Tuesday. This has arguably supported the price action on Wednesday as well. Attention then turns to the broader macro theme of central bank tightening later in the US session, with the Fed expected to hike rates by 50bps at 19:00 BST.

On Thursday, OPEC+ is scheduled to meet, with analysts expecting the meeting to be a no-show, with producers agreeing to continue their current policy of increasing production quotas by 400,000 barrels per day each month. The biggest issue right now is how well OPEC+ nations can keep up with increases in production quotas. Smaller nations have been struggling for the last 12 months, while sanctions mean Russia is now a big by-producer too.

Technical levels