SINGAPORE (BLOOMBERG) - Oil steadied after rising back above US$100 a barrel as investors weighed the fallout from Russia's pledge to cut natural gas supply to Poland and Bulgaria, while Europe looks at restricting crude imports from the country.
Russia will halt gas flows to the European Union nations on Wednesday (April 27), making good on a threat to stop supply to countries that refuse President Vladimir Putin's new demand to pay for the fuel in roubles. West Texas Intermediate futures gained 3.2 per cent on Tuesday after a two-day decline.
The market has been gripped by a tumultuous period of trading since Russia's invasion of Ukraine in late February. The US and Britain have pledged to ban oil imports from the Opec+ producer, but the EU has struggled for consensus on similar measures. The war continues despite efforts for a ceasefire.
Russia demanded payments in roubles after Moscow was hit by a raft of financial sanctions due to its war in Ukraine. The EU rejected the move in principle but now payment deadlines are starting to fall due, and the focus turns to other European capitals, particularly Berlin, which is heavily dependent on Russian gas. There was no immediate reaction from Germany.
Separately, German Economy Minister Robert Habeck said on Tuesday that the nation had already cut its reliance on Russian oil enough to make a full embargo "manageable".
Crude from Russia now makes up only 12 per cent of imports, from 35 per cent before the invasion, he said in Warsaw.
"With Russia moving closer to weaponising natural gas supplies to Europe, we are unlikely to see Brent crude below US$100 this week," said Mr Jeffrey Halley, a senior market analyst at Oanda Asia-Pacific. Concerns about a slowdown in China due to its virus lockdowns will limit price gains, he added.
There are some positive signs emerging from virus-hit China. Shanghai hinted at an easing of lockdown measures as infections dropped to the lowest in three weeks, while case numbers in Beijing stabilised. President Xi Jinping also made a commitment to boost infrastructure construction to bolster the economy.
Brent remains narrowly in backwardation after nearing a bearish contango structure on Tuesday. The global benchmark's prompt timespread was 41 US cents in backwardation - a bullish pattern - compared with as high as US$4.64 in early March just after the Russian invasion of Ukraine.
Separately, the American Petroleum Institute reported that US crude stockpiles rose by 4.78 million barrels last week, according to people familiar with the figures. Official government data is scheduled later on Wednesday.
