Prices Rise Sharply As Ukraine Attacks Russian Energy Infrastructure

Oil prices rose sharply by around 2.5% as Ukraine attacked energy sites in seven Russian regions. EIA data also showed a drawdown in US crude stocks and improved gasoline demand. The lower US dollar (USD index -0.1%) also supported oil.

• WTI approached $80/bbl and rose 2.6% to $79.60. It made a high of $79.90 before easing. Trend conditions remain bullish and any pullback is corrective. Initial resistance is at $80.85, March 1 high, and support at $76.61, 50-day EMA.
• Brent has held its break through $84 and finished up 2.6% at $84.03/bbl after a high of $84.24. A bullish structure is in place and the break above $83.65 is signalling the resumption of the bull cycle. Initial resistance is at $84.34 and support at $80.98.
• A Ukrainian drone strike on the Ryazan oil refinery near Moscow, one of the largest refining facilities in Russia, helped to boost prices as it signalled increased risks to energy infrastructure from the conflict. The facility can refine up to 340kbd.
• EIA data showed a 1.54mn barrel crude drawdown in the US last week, the first in almost two months. Refinery utilisation rose almost 2pp to 86.8%, more than expected. Gasoline stocks fell 5.66mn while distillate rose 0.89mn.
• Downside risks to oil prices persist with OPEC giving a mixed report on quota compliance with Iraq still producing above its. The EIA also said that 2024 US oil output will rise faster than originally expected. Fed rate cuts are yet to look imminent.