Crude Holding onto Decline as Price Cap Discussions Continue

Crude holding onto small daily losses as EU members struggle to come to an agreement on the Russian oil price cap details.

• The higher than expected price cap under consideration of 65-70$/bbl is likely to lead to a reduced drop off in Russian output than forecast with the current Urals price at or even below the suggested cap level. Countries such as Poland and Estonia are rejecting the cap as not ambitious enough and Greece do not want the level below 70$/bbl. The G7 announcement is waiting on an agreement from the EU members.
• Rising US recession fears and increasing lockdowns in China are weighing on weak oil demand growth expectations and adding to the downside market pressure.
• Brent is falling faster than WTI therefore closing the front month spread with WTI up to a -7$/bbl discount.
• Next Jan23 contract technical support on Brent is 82.31$/bbl and WTI at 74.96$/bbl.
  • Brent JAN 23 down -0.7% at 84.78$/bbl
  • WTI JAN 23 down -0.2% at 77.76$/bbl
  • WTI-Brent up 0.31$/bbl at -7.03$/bbl
  • Brent JAN 23-FEB 23 down -0.27$/bbl at 0$/bbl
  • Brent JUN 23-DEC 23 down -0.12$/bbl at 2.68$/bbl