WTI bears step it up and push back against corrective efforts

West Texas Intermediate (WTI) spot is down some 1.25% in Asia but had ended in the North American futures markets with a small gain on Wednesday following a report that US oil inventories rose last week. At the time of writing, the black gold is trading at $100.71 spot and has fallen from a high of $102.08bbls to a low of $110.63bbls. 

West Texas Intermediate crude for June delivery settled up US$0.32 to US$102.02 per barrel with the focus has been on Russia's suspension of natural-gas deliveries to Bulgaria and Poland. This has raised concerns over the use of its energy exports as a weapon while the two countries declined to pay for the shipments in rubles despite Russian demands.

''While the flows into Germany via the Yamal-Europe pipeline have routinely been at zero since mid-December, reductions to other customers can add further pressures on an energy system already under extreme pressure,'' analysts at TD Securities explained. 

''Furthermore, four countries have already paid in rubles and ten firms have opened accounts to meet the requirements. Europe also plans to temporarily increase purchases via these avenues to offset lost flow to Poland and Bulgaria, suggesting the fundamental impact may be muted for now, although risks to the region continue to grow,'' the analysts added.

''These risks will continue to cascade across the energy complex, as noted by a record surge in heating oil prices as shortages wreak havoc around the globe.''

Meanwhile, US oil inventory data showed an increase of 0.692mbbl. This was lower than the expected increase of 2mbbl. Gasoline inventories dropped by 1.573mbbl against expectations of 0.89mbbl build up. ''Further, US oil companies are signalling they will raise oil production from the US shale basin, which could see production ramping up by end of this year,'' analysts at ANZ Bank said.