Singapore May 4 2022: Crude oil futures were higher in mid-morning Asian trade May 4, recovering from overnight lows after plunging by more than $2/b, as investors digested conflicting signals of reduced demand from China and the growing possibility of a European ban on Russian oil imports.
At 10:15 am Singapore time (0215 GMT), the ICE July Brent futures contract was up 89 cents/b (0.85%) from the previous close at $105.86/b, while the NYMEX June light sweet crude contract was 96 cents/b (0.94%) higher at $103.37/b.
Crude oil prices have been bouncing within an increasingly narrow range since the war in Ukraine broke out in late February. The daily candlestick chart for ICE Brent crude showed a triangle pattern forming in recent weeks, analysts said, with prices likely poised for a breakout soon.
“Energy traders remain constructive on oil prices and appear still willing to look for opportunities on dips,” said SPI Asset Management Managing Partner Stephen Innes in a May 4 note. “Still, the whipsaw and volatility has made it extremely challenging to take tremendous directional views these days.”
Investors remained on edge over the possibility of an EU-wide ban on Russian oil imports. The EU is set to propose an embargo on Russian oil in its next sanctions package against Moscow this week, according to EU officials May 3, though the latest curbs will likely carve out exceptions for countries such as Hungary and Slovakia that depend heavily on Russian oil.
Germany, Europe’s biggest buyer of Russian oil, has already signaled it is ready to cope with a phased embargo on Russian crude and oil product imports.
Nonetheless, ship-tracking data showed Russian oil simply being diverted elsewhere in a rearranging of international crude oil flows, as buyers in Asia pick up the slack amid falling imports by European buyers.
India imported 627,000 b/d of Russia’s Urals crude in April, up from 274,000 b/d and zero in March and February respectively, according to data from commodity intelligence firm Kpler.
