Oil: Sanction risks grow – ING
|Crude oil prices came under pressure yesterday, with USD strength providing some headwinds for the market, ING's commodity experts Ewa Manthey and Warren Patterson note.
Risk of further sanctions against Russia
"Participants are taking a wait-and-see approach to Saturday’s OPEC+ meeting, when members will decide on July output levels. The meeting, originally scheduled for Sunday, has reportedly been brought forward. Another committee within OPEC+, the Joint Ministerial Monitoring Committee, is scheduled to meet today, though it’s not expected to result in any policy changes."
"The market is better supported in early morning trading today, possibly following comments overnight from President Trump about Russia. In a social media post, Trump said President Putin is “playing with fire”, suggesting frustration with Putin’s intensified attacks on Ukraine in recent days. This is despite a US push for a ceasefire. This increases the risk of further sanctions against Russia, putting Russian energy flows at risk."
"The ICE gasoil market continues to show signs of tightness. The prompt gasoil timespread saw its backwardation widen to US$8/t. The crack is holding relatively firm, despite broader demand concerns. Over the last two weeks, speculators have become more constructive towards the market, switching from a net short to a net long position. As for inventories, distillate stocks in the US remain tight, at the lowest for this time of year since 2003, even as gasoil stocks remain comfortable in the ARA region in Europe."
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