Volatile Prices Ahead of OPEC Meeting

Oil fell back late yesterday after reaching a peak following the announcement of the EU ban on Russian oil. The move lower came as reports suggested the possibility of OPEC exempting Russia from its oil production deal.

• Brent AUG 22 up 0.8% at 116.51$/bbl
• WTI JUL 22 up 0.7% at 115.52$/bbl
• Gasoil JUN 22 down -1.4% at 1226.5$/mt
• China easing of covid restrictions, and the start of the US driving season are both adding bullish pressure to the prices. New infections in Shanghai have fallen to the lowest since early Mar leading to the gradual reopening of businesses and residential areas.
• The existing OPEC quota agreement with Russia and nine other allies ends in September and group’s output targets return to pre-pandemic levels. Although it seems that the coalition is keen to continue partnership, a report in the Wall Street Journal suggests Russia could be exempt from targets due to sanctions limiting their production ability. With Russia exempt it could allow Saudi Arabia, UAE and others with spare capacity to increase production. The next OPEC meeting takes place on Thursday.
• Crude spreads partially followed the move lower and lost the gains seen earlier in the day.
• Brent AUG 22-SEP 22 up 0.05$/bbl at 3.07$/bbl
• Brent DEC 22-DEC 23 down -0.34$/bbl at 14$/bbl