Oil extends advance above US$100 as Putin vows to continue war in Ukraine

Brent crude futures rose 6.3 per cent, while US West Texas Intermediate rose 6.7 per cent. PHOTO: REUTERS

LONDON (REUTERS) - Oil pushed higher on Wednesday (April 13) after rallying back above US$100 a barrel after Moscow said that peace talks with Ukraine had hit a dead end, fuelling supply worries, while weak economic data from China and Japan kept a lid on gains.

Brent crude rose by 48 cents, or 0.5 per cent, to US$105.12 a barrel by 4.08pm Singapore time, while US West Texas Intermediate crude futures gained 28 cents, or 0.3 per cent, to US$100.88.

Both benchmarks had surged by more than 6 per cent on Tuesday.

“The downside for oil prices is limited,” said Oanda senior market analyst Jeffrey Halley, citing the Russian comments on peace talks and United States President Joe Biden accusing Russia of genocide.

These “are reinforcing that the Ukraine-Russia situation will not be de-escalating any time soon”, he said.

Russian President Vladimir Putin on Tuesday blamed Ukraine for derailing peace talks and said Moscow would not let up on what it calls a “special operation” to disarm its neighbour.

Crude futures are also drawing support from Russian oil and gas condensate production falling to below 10 million barrels per day (bpd) on Monday, its lowest since July 2020.

The International Energy Agency on Tuesday said it expected Russian oil output losses to average 1.5 million bpd in April, with losses growing to close to three million bpd from May.

Western sanctions against Russia and logistical constraints have hampered trade, sources familiar with the data said on Tuesday.

Reports this week of partial easing of some of China’s tight Covid-19 lockdown measures also underpinned oil prices.

Price gains, however, were kept in check by weak data from China and Japan.
China’s crude oil imports slipped 14 per cent from a year earlier, extending a two-month slide, as strict coronavirus restrictions hit demand in the world’s top crude importer.

Japan reported its biggest monthly fall in core machinery orders in nearly two years, dragged down by a steep drop in demand from information technology and other service companies.

The Organisation of the Petroleum Exporting Countries (Opec) has warned that it would be impossible to replace potential supply losses from Russia and signalled that it would not pump more crude.

Opec on Tuesday cut its forecast for 2022 global oil demand growth, citing the impact of Russia’s invasion, rising inflation as crude prices soar and the resurgence of the Omicron coronavirus variant in China.

It now expects global demand to grow by 3.67 million bpd this year, down 480,000 bpd from its previous forecast. 

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