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Oil up Almost 9% on Week as Supply Scare Hijacks Trade -Breaking


© Reuters.

By Barani Krishnan — A selloff of oil will only be an opportunity to buy back in the face of some extreme volatility in the energy market.

Crude prices rose by almost 3% over the course of the day, and almost 9% for the week. This was due to a supply panic triggered once more by the news that the European Union may phase out a ban against Russian oil imports.

Oil gains were restricted earlier in the day, as Chinese refiners seemed to be aiming for a 6% reduction in crude oil throughput. Analysts and industry sources said that this reduction would represent a drastic change from the COVID-19 outbreak of two years earlier.

News of the EU’s planned ban on Russian crude oil led buyers to purchase more of it and convince some shorts to also cover their positions before the Good Friday holiday. It meant that the weekend was longer for U.S. market.

“Heading into the long weekend, oil was vulnerable to some profit-taking, but a major pullback is still unwarranted given the supply situation and as economic slowdown concerns are still far from happening,” said Ed Moya, analyst at online trading platform OANDA.

On the global crude benchmark, it settled at $111.70/barrel, up $2.92 or 2.7%. Brent was up 8.7% this week after suffering back-to-back losses of 13%.

New York-traded U.S. crude benchmark , or WTI, finished Thursday’s trade up $2.70, or 2.6%, at $106.95. WTI was up 8.8% this week following a 13% decline in two prior weeks.

The New York Times reports that the European Union is moving towards a gradual-in ban on Russian oil. This would allow Germany and other countries to plan for alternative suppliers.

An imposed ban on European buyers would cause them to “look for alternative sources”, Andrew Lipow, of Lipow Oil Associates, Houston stated.

Russia’s Energy Ministry stated that it is restricting access to statistics about oil and gas production, exports and imports.

The International Energy Agency (IEA) warned Wednesday that Russian oil production could drop to 3,000,000 barrels per day by May due to either sanctions or buyer shunning Russian goods.

Reuters reports that major global trading companies will also cut down on crude and fuel imports from Russia’s state oil companies.