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Crude Oil fell more than 2% on Tuesday, as the market quickly gave up its modest gains on Monday and discounted any meaningful supply risks related to the chaotic weekend events in Russia.
Russian crude exports exceeded expectations over the past year As the country continues to find buying interest from China, India and elsewhere to counter the loss of market share in the US and EU.
Nymex Crude Oil Closed First Month (CL1:COM) for August delivery -2.4% to $67.70 a barrel, the fifth lowest settlement value this year, for August Brent (CO1:COM). -2.6% To $72.26 a barrel, its second lowest settlement to date.
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“It will take a lot to change the minds of energy traders,” writes Edward Moya of OANDA. “Fears about a weaker global growth outlook are not going away anytime soon.”
Russia is on the cusp of overtaking Saudi Arabia As the largest supplier of oil to China, thanks to Russia selling oil at deep discounts.
Shipments from Russia now account for 14% of Chinese supply in the three months through May, up from 8.8% before the Ukraine war, while Saudi Arabia’s share has fallen to 14.5%, according to commodity data provider Kpler, which also says Russia now accounts for ~ 0% of India’s imports, up from 3% before the war.
An influx of cheap Russian oil has helped drive down global prices, making Saudi Arabia’s surprise move earlier this month to cut an additional 1 million barrels per day of oil in an effort to push prices higher as a failure, at least for now.
However, the increase in Chinese demand in the third quarter, which is expected by many analysts, is likely to push prices higher and justify the Saudi move to limit production.
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