There was no shortage of declining news for the oil markets. Earlier, European countries withdrew threats of sanctions on Russian oil after Russia promised to cut off military operations in northern Ukraine. The promise sparked hope that the war in Ukraine could finally begin to escalate. Russia could, however, continue to be in line for new sanctions: the flow of “bloody money” to Russia must stop, the Kiev mayor said as the West prepares for new sanctions in Moscow following the discovery of dead civilians on the streets. of a confiscated Ukrainian city. by Russian invaders. Since Russian forces withdrew from northern Ukraine, turning their attack south and east, gloomy images of the city of Bucha near Kyiv, including a mass grave and the bodies of people shot at close range, have caused international outcry. anger. Rising risks from the cessation of Russian exports have been offset by the downside risks of China’s recession and coronavirus outbreaks. Markets reacted negatively as Shanghai extended lockdowns throughout the city. The lockdowns were imposed indefinitely amid growing public outrage over quarantine rules, as citywide trials saw new COVID-19 cases rise to more than 13,000. China’s strategy for zero COVID-19 is likely to lead to even more lockdowns that are likely to significantly reduce oil demand for the Asian giant. China is the largest importer of crude in the world and falling demand can help reduce market bottlenecks. The SPR “move could stop oil prices from jumping to $ 150 and above, and in the short term will push prices down. However, with the war still going on and Putin demanding payment in rubles … “It’s not going to crush the price of oil,” Peter Cardillo of Sparta told the Wall Street Journal. The member states of the International Energy Agency (IEA) are also making plans to release their own strategic oil reserves. During a press conference last Thursday, President Biden said he expects the allies to release 30-50 MB in addition to the US release. Hedge Funds Dumping Oil With all these negative catalysts, it is not surprising that oil purchasing power has eased somewhat. According to Reuters, hedge funds and other money managers sold the equivalent of 15 million barrels of the six most important futures contracts and oil options for the week to March 29, including the liquidation of 10 million barrels of previous 6 million barrels and upwards of 1 million barrels. new declining negative positions. This marked a sharp reversal from the 16 million barrel markets last week – and could be worse than when the report was presented before the Biden government announced the SPR. Oil fund cash flows also suggest that the industry could be over-bought. After raising $ 1.75 billion last year, the Energy Select Sector Fund SPDR (NYSEARCA: XLE) recorded $ 1.46 billion in outflows in March as Russia’s war in Ukraine illuminates energy security and also indicates a possible peak. for oil and gas stocks as market players make profits. By contrast, renewable energy funds recorded $ 642 million in inflows in March, breaking a three-month losing streak of $ 1.9 billion. Higher and volatile oil and gas prices have made the case of renewable energy sources more attractive. That said, funds remain significantly higher on the outlook for refined fuels and medium spirits than for crude, reflecting the low level of diesel and diesel reserves worldwide. Even in spirits, however, the rise comes from low stocks and the impact of the conflict on Russia’s exports has been mitigated by concerns about the economic slowdown that has been evident in the United States, Europe, China and the rest of Asia. By Alex Kimani for Oilprice.com More top readings from Oilprice.com:
