Zimpapers Logo

Oil eased as traders waited for news on whether a key crude pipeline from Russia to Europe would be able to resume flows in the coming days, and assessed industry estimates showing a rise in US inventories.

West Texas Intermediate fell below $90 after a volatile session on Tuesday, when Russia’s Transneft PJSC said Ukraine halted flows through the southern section of the Druzhba pipeline toward Hungary, the Czech Republic and Slovakia on Aug. 4 as sanctions blocked payment of Moscow’s transit fee. Czech pipeline operator Mero CR said it expected services to be restored within days.

Estimates from the industry-funded American Petroleum Institute showed a 2,2 million barrel increase in US crude stockpiles last week, including a build at the key storage hub at Cushing, Oklahoma, according to people familiar with the data. Official figures will follow later on Wednesday. Crude hit a six-month low last week on signs that demand was weakening, especially for US gasoline, just as investors fretted that a global slowdown is looming. Still, plenty of bullish risks for crude remain as Russia’s invasion of Ukraine drags on and sanctions against Moscow pile up. Separately, producer group OPEC+ has warned its spare capacity has sunk to extremely low levels.

“We think oil’s recession-triggered downturn may have ended,” said Zhou Mi, an analyst at the Chaos Research Institute in Shanghai, citing prospects for limited additional supply. For now, the Druzhba halt seems to be an issue on the Ukrainian side, not Russia’s, so the impact is limited, he added. – Bloomberg