During U.S. trade hours on Wednesday, oil prices increased as Hurricane Ian’s production reductions overcame the negative effects of a strengthening currency and anticipated increases in U.S. crude stockpiles.
Brent crude futures had increased by 80 cents, or 0.9%, to $87.071 per barrel, while the U.S. The price of WTI oil futures increased by 97 cents or 1.22%. Both contracts reversed earlier losses after increasing by more than 2% the session before. Hurricane Ian caused the reduction of Gulf of Mexico’s oil production by around 190,000 BPD, or 11% of the Gulf’s total (BSEE).
Bank of England announced it would intervene in the bond market to stop a harmful rise in borrowing prices. This eased investors’ fears of a financial system-wide contagion. On Wednesday, global equities recovered from two-year lows.
According to market sources on Tuesday, who cited data from the American Petroleum Institute, U.S. crude oil stocks increased by about 4.2M barrels for the week ending September 23, while gasoline inventories decreased by about 1M. Distillate stocks increased by about 438,002 barrels, the sources said.
On Tuesday, Goldman Sachs cut its oil price forecast for 2023, expecting weaker demand and a stronger dollar. However, it added that the global supply shortage will only strengthen its long-term bullish outlook.
The producer group OPEC+ meeting on October 5 will act as a price catalyst. Russia should propose a production cut of about 1M BPD, according to a person familiar with the Russian perspective on Tuesday.
Norway’s Gas and Oil Sector
Norway stepped up security in its gas and oil industry on Wednesday to guard against potential sabotage after numerous nations reported that two Russian pipelines to Europe spewing gas into the Baltic were attacked.
The Nordic nation is now Europe’s largest gas supplier and a significant worldwide oil supplier. Still, a military expert warned that the security of its oil sector might be too loose.
The Tuesday discovery of suspected sabotage on the Nord Stream pipelines led to gas leaks, which shook the energy market and raised security worries.
The government should hire specialized vessels capable of underwater surveillance readily available in Norway’s large maritime industry as there is currently a lack of coordination between the gas and oil industry, police, and military, all of which have different security responsibilities for on-and offshore installations.
EU Considers Ban on Russian Oil Shipments
As it continues to debate setting a price cap on Russian oil, the EU is thinking about adding shipping restrictions to its oil sanctions, Bloomberg reported, citing sources.
The shipping embargo would make it illegal for EU ships to transport Russian oil sold above the threshold. Greece is by far the greatest owner of oil tankers worldwide.
The EU oil sanctionrestrictingriction on services like insurance, brokering, and financing regarding transporting oil worldwide and exemptions for pipeline shipments. They also include an embargo on Russian offshore oil. The package is scheduled to go into effect for offshore oil in December and petroleum products in early 2023.
Due to pressure from shipping nations like Greece and Cyprus, shipping was taken out of the previous deal. Theoretically, ships that are not reliant on EU services might continue to transport Russian oil outside the EU. To permit deliveries of services under a set price cap, the EU will need to alter its prior sanctions. All 27 member nations would need to approve these adjustments.
Nations that import oil by sea may be concerned about an unfair playing field. However, EU members that have gotten preferential treatment for brent entering through pipelines would likely wish to protect their integrity. According to the source, carrier nations also search for strategies to safeguard their sector. Hungary has declared that it will stop promoting energy sanctions.
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