Oil prices fall as Druzhba pipeline resumes flows, Auto News, ET Auto
By Shariq Khan
Oil prices fell by more than a dollar on Wednesday as Russian oil shipments via the Druzhba pipeline to Hungary restarted and rising COVID-19 cases in China weighed on sentiment.
Brent crude futures fell $1.21, or 1.3%, to $92.65 a barrel by 1:35 p.m. EST (1835 GMT), and U.S. West Texas Intermediate (WTI) crude futures slid $1.52, or 1.8%, to $85.40 a barrel.
Prices slid into negative territory after Hungarian Foreign Minister Peter Szijjarto said that flows through the Druzhba oil pipeline from Russia had resumed following a brief outage.
Supply to parts of Eastern and Central Europe via a section of the pipeline were temporarily suspended on Tuesday for technical reasons, according to oil pipeline operators in Hungary and Slovakia.
The market was underpinned by a larger-than-expected decline in U.S. crude stocks. The Energy Information Administration said U.S. crude inventories fell by 5.4 million barrels last week, compared with expectations for a 440,000-barrel drop.
Oil prices were also supported by a report from tanker-tracker Petro-Logistics that said exports from the Organization of Petroleum Exporting Countries (OPEC) have fallen significantly so far this month.
Both crude benchmarks were up sharply earlier in the session after a tanker was hit off the coast of Oman on Tuesday, sustaining minor damage, highlighting the geopolitical risks in the world’s busiest routes for oil shipments.
“Various geopolitical influences – from an oil tanker being hit by a bomb-carrying drone off the coast of Oman, to Russia tensions – are being largely dismissed in favor of a focus on the more bearish elements such as weak Chinese economic data and demand,” said Matt Smith, oil analyst at Kpler.
In China, rising COVID-19 cases weighed on sentiment after an easing of virus restrictions this week.
“Oil demand growth in the country is being hampered by its unyielding faith in a zero-tolerance COVID-19 policy and persistent economic weakness,” PVM Oil analyst Stephen Brennock said.
The International Energy Agency (IEA) forecast demand growth to slow to 1.6 million bpd in 2023 from 2.1 million bpd this year.