Tight oil and product markets and the forthcoming US driving season are proving to support oil, as is the gradual reopening of the Chinese economy.
Europe continues to consider an embargo on Russian oil and products. While Brent approaching $114/b already bakes in some of that disruption to Russian energy flows, we can’t rule out a price spike if an embargo comes at the same time as an uptick in demand from US seasonal effects and as Chinese restrictions ease.
Indeed, a highly supportive cast of confluence should support oil prices. Although arguably, oil demand will not be immune from a cyclical downtrend that most market analysts screen as inevitable.
Given the EU embargo on Russian oil is a “when” not an “if” question, even if Hungary fails to fall into line; it is clear that Russian exports are under pressure and will continue to be so on the back of the 26 EU nations that support the ban.
Originally published by Stephen Innes, Managing Partner, SPI ASSET MANAGEMENT
