Oil futures turned higher Tuesday after news reports said Russia halted crude flows along the Druzhba pipeline toward Hungary, the Czech Republic and Slovakia.
Price action
-
West Texas Intermediate crude for September delivery
CL.1,
+1.10% CLU22,
+1.10%
rose $1.25, or 1.4%, to $92.01 a barrel on the New York Mercantile Exchange. -
October Brent crude
BRN00,
+1.20% BRNV22,
+1.20% ,
the global benchmark, was up $1.32, or 1.4%, at $97.97 a barrel on ICE Futures Europe. -
Back on Nymex, September gasoline
RBU22,
+1.65%
rose 1.7% to $2.935 a gallon, while September heating oil
HOU22,
+4.23%
rallied 3.8% to $3.299 a gallon. -
September natural gas
NGU22,
+2.04%
gained 1.7% to $7.719 per million British thermal units.
Market drivers
Russia suspended crude flows through the Druzhba pipeline toward Hungary, the Czech Republic and Slovakia on Tuesday after sanctions prevented payment of a transit fee, Bloomberg reported Tuesday. Druzhba is the world’s longest pipeline network.
WTI slumped last week to a six-month low, while Brent hit its lowest since mid-February as recession fears overshadowed supply concerns. Recession worries were blunted Friday after a much stronger-than-expected U.S. jobs report for July.
Demand concerns may remain difficult to shake as China crude imports remain subdued in light of the country’s efforts to contain COVID-19 outbreaks.
“Unless domestic demand picks up noticeably or more fuel exports are allowed, refineries are hardly likely to want to import more crude oil. Chinese crude oil imports are set to decrease for the second year in a row, resulting in the lowest annual import volume since 2018,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note.
“For now the days when China served as the engine of global oil demand are a thing of the past. And this will do nothing to ease demand concerns on the oil market,” he wrote.
