Flat As EU Sanctions Miss Russian Crude For Now

WTI and Brent are either side of unchanged at typing, having risen from session lows below neutral levels. Both benchmarks however operate around the lower end of Tuesday’s range as the impulse from expectations surrounding an EU embargo on Russian energy has weakened from earlier in the week.

• To elaborate, the bloc has announced a phased ban on Russian coal imports in their latest round of sanctions in response to alleged war crimes in Ukraine, missing expectations from some quarters for similar measures on Russian crude. EC President Ursula von der Leyen has since stated that members will continue working on ending imports of Russian oil and gas, with no timeline specified.
• Looking to China, concerns re: energy demand remain elevated as fresh COVID case counts nationwide for Apr 5 surged past 20K (both symptomatic and asymptomatic). Shanghai will remain under lockdown as the authorities announced another round of mass testing to begin on Wednesday, while transport ministry data reported late on Tuesday revealed that travel by road and air over the recent Qingming national holiday had declined by much more than expected as the country expands pandemic control measures in some areas.
• Elsewhere, some worry re: tightness in crude supplies was alleviated as weekly U.S. API inventory estimates crossed late on Tuesday. Reports pointed to a surprise build in U.S. crude stockpiles and increases in distillate and Cushing hub inventories, while there was a drawdown in gasoline inventories.
• Up next, U.S. EIA data is due later on Wednesday (1430 GMT), with WSJ estimates calling for declines in crude, gasoline, and distillate stockpiles.