IN THIS REPORT: Asian inventory levels. Russian sanctions, Dallas Fed Oil company survey and WTI Price action analysis.
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We reopened trade on Friday to oil prices on the London open up 1.12%. By the time we opened on NYMEX WTI was up 4.69% or $3.48. News of impending White House sanctions on Russian oil had been leaked and were being priced in. The actual announcement came a little later in the session after NYMEX opened. This served as a great example of how the market prices in everything straight away.
The main target of the sanctions, done in coordination with the UK, are major Russian energy companies — Gazprom Neft and Surgutneftegas. The two firms exported about 970,000 barrels a day of oil by sea in the first 10 months of 2024, about 30% of the nation’s total flows on tankers- Bloomberg.
This is naturally a bullish event, further constricting Russian sales and transportation of crude. However it is not the only bull driver we have had since the start of the year.
If you are reading oil analysts that are still speaking about weak Chinese demand, please ask them to update their view. Asian demand is showing clear signs of reloading. Have a look at the charts as below. After the China stimulus/ bazooka , we can see China has been rapidly bolstering its onshore inventories into the new year. At the same time, South Asia has weak stocks given its rising demand through 2024 and looking set to continue this tight supply picture through 2025. Continue reading below
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