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Both WTI and Brent crude oil opened about 1% higher on Monday, currently trading at $102.57 per barrel and $107.15 per barrel, respectively.On March 30th, Jefferies stated that Australian refineries can only meet a small fraction of domestic fuel demand. The conflict in Iran has led to rising petrol and diesel prices, and Australias competition regulator has expressed concern about supply issues in areas including suburban areas, regional towns, and remote regions. Jefferies estimates that Australian refinery output can meet approximately 37% of petrol demand and about 14% of diesel demand. This conclusion is based on an analysis of Australian oil statistics from last year. "Even in Queensland and Victoria, where Ampore and Viva Energy respectively own refineries, the output of Litton and Geelong is insufficient to meet the states total demand for petrol or diesel," said analyst Michael Simotas.According to Iranian state media, a petrochemical plant in Tabriz, a city in northwestern Iran, was attacked.1. Ukrainian Armed Forces: Russian troops lost approximately 1,360 soldiers yesterday. 2. RIA Novosti: Russia claims to have captured the village of Kivsharivka in Kharkiv Oblast, Ukraine. 3. Russia warns South Korea that it will retaliate if it provides lethal weapons to Ukraine. 4. Kremlin spokesman Dmitry Peskov: Russian-American relations have fallen to a historic low in recent years; Russia is willing to develop relations with the US. 5. Ukrainian President Volodymyr Zelensky: Following the Ukrainian attack, oil refineries in Leningrad Oblast, Russia, are operating at only 40% capacity. 6. Governor of Leningrad Oblast: A fire broke out at the Baltic port of Ust-Luga, Russia, caused by a Ukrainian drone attack; the fire is now under control.On March 30th, economist Rory Robertson stated that the Australian economy may have already experienced a downturn due to the oil price shock and threats to energy supplies. If the economy did not actually contract in March, the constraints imposed on numerous industries by the sudden surge in fuel prices (especially diesel) and reduced supply could force a slight contraction in economic activity in April. Robertson stated that the economic outlook depends on whether the problems can be resolved as quickly as they appeared. He added that historical experience shows that sudden and prolonged oil price shocks often turn into economic disasters.

As The Dollar Rises, Oil Falls Despite Russian Supply Cuts

Skylar Williams

Feb 27, 2023 14:11

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Oil prices dipped in volatile trade on Monday, as a stronger dollar and concerns of recession risks offset gains from Russia's plans to deepen oil supply cuts.


At 04:11 GMT, West Texas Intermediate U.S. crude futures (WTI) were trading 23 cents or 0.3% lower at $76.09 per barrel, while Brent crude futures were down 30 cents or 0.36% at $82.86 per barrel.


Friday's closing prices for both indices were up by more than 90 cents.


Monday, the dollar hovered near a seven-week high after a slew of strong U.S. economic data bolstered the view that the Federal Reserve will need to raise interest rates further and for an extended period of time.


A strong dollar increases the cost of U.S. dollar-priced goods for foreign currency holders.


Vandana Hari, founder of oil market analysis firm Vanda (NASDAQ:VNDA) Insights, stated, "Crude continues to receive direction from the broader financial markets' sentiment."


Fears of a hawkish Federal Reserve returned to the forefront on Friday after the personal consumption expenditures (PCE) price index increased by 0.6% in January, following a 0.2% increase in December.


"Crude will undoubtedly face renewed pressure if risk aversion continues to grow," Hari predicted.


Last week, U.S. crude oil inventories reached their highest level since May 2021, according to data from the Energy Information Administration (EIA). This development added to the downward pressure on crude oil prices.


"The EIA data continue to generate more questions rather than provide clarity on markets," analysts at the consulting firm Energy Aspects wrote in a note, referring to the steep supply adjustment in the data that contributed to the increase.


On the supply side, Russia intends to reduce oil exports from its western ports by as much as 25% in March compared to February, exceeding its previously announced 5% production cut for the month.


Since February 24, 2022, when Russian military entered Ukraine for the first time, oil prices have decreased by approximately six percent annually.


Russia ceased oil deliveries to Poland via the Druzhba pipeline, the CEO of Polish refiner PKN Orlen said on Saturday, a day after Poland delivered its first Leopard tanks to Ukraine.


Two weeks after the invasion, oil prices soared to a record high of nearly $128 per barrel due to supply worries, but have since retreated due to fears of a global economic decline.


Separately, investors are awaiting this week's China manufacturing surveys to determine the direction of crude demand. This weekend marks the beginning of China's annual parliamentary session, during which new economic policy goals and guidelines will be introduced.


Ning Zhang, senior China economist at UBS Investment Bank, said in a note: "We anticipate the government to reiterate the importance of growth support and call for more policy support."


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