By Barani Krishnan
Investing.com — Oil bulls’ misfortunes seem to be limited so long as Russia continues having misfortunes in getting its crude out.
Crude prices settled down but off Tuesday’s lows after the energy ministry in Moscow warned that Russian and Kazakhstan oil exports via the Caspian Pipeline Consortium, or CPC, may fall by up to 1 million barrels daily due to storm-damaged berths. Pavel Sorokin, Russia’s deputy energy minister, said repair works could take up to two months.
The CPC is a joint-venture to transport Caspian oil from the Tengiz field to the Novorossiysk-2 Marine Terminal on Russia’s Black Sea coast. It is also a major export route for oil from the Kashagan and Karachaganak fields. The pipeline ships around 1.2 million barrels daily, or 1.2% of the global demand for oil.
With sanctions and other curbs on Russia already depriving global oil markets of an estimated 3 million barrels per day in supply, the drop in the CPC flows weighed further on the nerves of oil traders.
Crude prices, which had been down as much as 2% earlier on Tuesday due to Europe’s indecision in implementing a U.S.-style ban on Russian crude, recovered from session lows on the CPC news.
“The CPC had been in a very gray area since the Russian invasion of Ukraine began and this story only adds to the suspected deficit in global oil supplies stemming from Russia’s misfortunes,” said John Kilduff, founding partner at New York energy hedge fund Again Capital.
U.S. crude’s , or WTI, benchmark settled down 36 cents, or 0.3%, at $111.76 a barrel. WTI hit a session low of $107.12 earlier. It had gained about 17% in three previous sessions.
London-traded , the global benchmark for oil, settled down 14 cents, or 0.1%, at $115.48 a barrel, off the session low of $112.66. Like WTI, Brent had gained 17% between the settlement of Wednesday and Monday.
Brent and WTI lost as much as 2% earlier on Tuesday as the European Union’s foreign ministers disagreed on whether and how to slap sanctions on Russia’s energy sector.
The EU and allies have already imposed hefty measures against Moscow, including freezing its central bank’s assets. But targeting Russian energy exports, as the United States and Britain have done, is a divisive choice for the 27-nation EU, which relies on Russia for 25% of its oil and 40% of its gas.
“The oil market remains very tight and completely fixated over every development with the war in Ukraine,” said Ed Moya, analyst at online trading platform OANDA.
Aside from the Russia-Ukraine narrative, traders were on the lookout on Tuesday for U.S. weekly oil inventory data, due after market settlement from the American Petroleum Institute, or API.
The API will release at approximately 4:30 PM ET (20:30 GMT) a snapshot of closing balances on U.S. crude, gasoline and distillates for the week ended March 18. The numbers serve as a precursor to official inventory data on the same due from the U.S. Energy Information Administration on Wednesday.
For the week ended March 18, analysts tracked by Investing.com expect the EIA to report a build of 114,000 barrels, on top of the 4.35 million build it reported for the week to March 11.
On the front, the consensus is for a draw of 1.99 million barrels over the 3.62 million barrels consumed in the previous week.
With , the expectation is for a drop of 1.39 million barrels versus the prior week’s build of 332,000.