(New York) Oil prices rebounded strongly on Wednesday in a highly volatile market after several losing sessions, boosted by concerns over Russian hydrocarbon supplies that could push the European Union into an embargo.
A barrel of US West Texas Intermediate (WTI) for June delivery climbed 5.96% to $105.71, after dropping more than 3% the day before and slipping below $100.
That of Brent from the North Sea for July delivery, listed in London, rose 4.92% to 107.51 dollars.
Prices rose early in the day after news of a Russian gas supply disruption in pipelines passing through Ukraine.
“We’ve seen cuts in Russian natural gas to Europe and that has been a major concern for investors which has supported the price rebound,” said Matt Smith, chief oil analyst at Kpler.
“Considering the cuts that have already taken place in Bulgaria, Poland, this will push European leaders to lean towards an embargo or to pivot towards other sources of supply than Russian energy,” he added.
Fears about the reliability of Russian hydrocarbon supplies have thus flared up again, with the volume of Russian gas transiting through Ukraine appearing to be down on Wednesday, as fighting in the east of the country with the Russian army is preventing Kyiv the proper functioning of gas infrastructure.
For Victoria Scholar, analyst for Interactive Investor, “the prospect of a ban on Russian oil by the European Union and the restrictive effect this would have on the availability” of hydrocarbons, thus pushed prices up.
After a week of decline for black gold, prices having been showered by fears of a slowdown linked to confinements in China, the rise in prices was also fueled by a technical factor, estimated Andrew Lebow of Commodity Research Group.
“It must be recognized that we are operating in highly volatile exchanges with large price differentials in recent days. This price rally is partly a rebound from the bad sessions,” he said.
The U.S. Weekly Inventories report came out mixed, and “basically, its impact was neutral on the market” which remained strongly bullish on Wednesday, Matt Smith said.
Commercial crude oil reserves in the United States surged unexpectedly last week by 8.5 million barrels, which is usually not looked upon favorably by the market, as it would mean a demand failure.
But this strong rebound actually reflects a significant drawdown on US strategic reserves of 7 million barrels, according to the weekly report from the US Energy Information Agency (EIA).
Since September, and in an accelerated fashion since the war in Ukraine, Joe Biden’s government has been drawing on strategic reserves, which have melted by more than 78 million barrels in the past seven months, with the aim of lowering prices at the pump. .
In an even tighter market for finished goods, the price of gasoline at the pump on Wednesday climbed to a new record, in non-inflation-adjusted data, at 4.40 dollars per gallon (3.78 liters). , according to the AAA (American Automobile Association).
The Biden administration will draw even more from its strategic reserves at the rate of 7 million barrels per week for the next six months starting in May, always with the aim of driving down prices.