Oil prices fell after the U.S. government announced it would release crude from the Strategic Petroleum Reserve, while traders eyed inflation data for further clues.
Brent crude futures were down 90 cents, or 1.4%, at $85.72 a barrel at 1320. The DOE thought it would sell too much and so it was going to stop after fiscal year 2023. But that would require an act of Congress to change the mandate.
Supply fears also eased after the EIA said it expects record March production from the seven largest U.S. shale basins.
OPEC raised its 2023 oil demand forecast by 100,001 barrels per day in its monthly report, helping China’s economy reopen after coronavirus restrictions.
Traders also awaited key U.S. consumer price index (CPI) data for January on Tuesday. The data showed that U.S. consumer prices accelerated, but annual growth was the smallest since late 2021. This means inflation is slowing down and the Federal Reserve likely won’t raise interest rates.
The Federal Reserve will raise interest rates twice in the coming months. Higher inflation and further rate hikes could affect risk assets such as oil.
Old gas ties with Europe lie
Moscow’s gas trade with Europe, carefully crafted for decades as the Kremlin’s main revenue stream, is unlikely to recover from the devastation of the military conflict.
The latest sanctions, including a price cap, are expected to slow oil trade, but it is easier to find new markets for crude.
Russia’s gas trade with Europe relies on thousands of miles of pipelines that start in Siberia and extend to Germany and beyond.
Since the military operation began on February 24 last year, less information has been released.
Like many Russian companies, Gazprom doesn’t disclose financial details.
The figures, combined with export forecasts and average gas prices, mean Gazprom’s export earnings will almost halve this year, adding to the $25 billion budget deficit Russia announced in January.
Last year, the company’s natural gas exports almost halved and reached post-Soviet levels, and the downward trend also continued this year.
Russia cut off 80% of gas supplies to the European Union within eight months of the beginning of the conflict in Ukraine.
Russia supplied 7.52% of Western Europe’s gas needs last year, down from 40.5% in 2021.
Before the war, Russia thought it was selling more to Europe, not less.
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