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Commodities

Russia and India will switch to a new oil trade business model

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crude oil trade time

India keeps buying Russian oil in large quantities and carries on the oil trade business. However, it seems that by the end of the year it will have to adapt to the new trading system – through small independent traders, which will save Indian business from the pressure of the U.S. and the EU.

The probability that India will expand the channels to import Russian oil by involving small foreign traders in the process is quite high. Firstly, Indian companies will not have to wait for approval of long-term contracts with Russian suppliers. Secondly, India will be able to remove its own large companies from possible pressure. 

Russia will win in any case, because there will be a steady buyer for its oil, and the absence of economic stiffness with Western sanctions will make it possible to increase exports. Now the oil trade chart is extremely unstable, so it is important for traders to keep abreast of all developments. 

What oil trade brokers need to know: the time for small traders is coming

The Economic Times recently reported that India’s biggest oil refiners are considering involving small foreign firms in supplying discounted oil from Russia which “was abandoned by the Western importers”. At the moment in the turnover of Russian hydrocarbons are involved such new players as Wellbred, Manfort Capital Energy, and others, who filled the niche of suppliers after the departure of big traders. The edition stressed that Indian oil refiners are ready to take risks, as the new companies guarantee cheap raw material supplies to India. 

India could switch to working with small traders to cover current needs. If we are talking about long-term contracts, then it is more reliable for the state to enter into an agreement with a supplier directly. But there is a probability that Russian oil producers do not currently have free volumes to guarantee their delivery to the Indian market. Therefore, it is easier for India to buy individual batches with the help of traders. Now is not the best time for crude oil trading, so market participants have to take such steps. 

When Indian companies started to actively buy crude oil in Russia and make new contracts with Russian companies, they started to come under pressure. The U.S. indirectly urged the Indian government not to let Russia bypass sanctions. Although U.S. rhetoric has changed somewhat recently, the risks for large Indian businesses remain. 

Crude oil trade today: Buying volumes may even rise

It makes sense for both Russia and India to look for options for crude oil trade today that would be safer than the usual models involving using dollar financial infrastructure and its variations. Western insurers, freight and so on. 

There are large companies in India that are under the scrutiny of the Western public, the media. It is better for these big players to step back somewhat so that all transactions with Russia are handled by second-tier companies. The same thing is happening in China: there are first-tier companies; they want to stay in the market of Western countries. But there is a mass of companies, maybe even related to the first-tier business, that actively interact with Russia. 

The transition to trading through small traders may require adaptation, but on the whole, this scheme is working. This is confirmed by the growth in oil supplies from Russia to India to almost one million barrels per day. 

Depending on what happens next, India may also increase its oil purchases. Compared to the June peaks, supply has slightly decreased. There will be a lot of Russian oil on the Indian market, and the new trading mechanisms will soon replace the old ones. At the same time, the U.S. will no longer be able to influence the mentioned second-tier companies from India.



Commodities

Oil prices wrap up Q1 with strong gains as Russia cuts ease oversupply worries

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Investing.com– Oil prices settled higher Thursday to wrap the first quarter with strong gains as bets on lower Russia output eased worries about a global supply surplus.    

At 14:30 ET (18:30 GMT), rose 1.6% to settle at $87.48 a barrel, while rose 2.2% to $83.17 a barrel taking its gains for Q1 to about 16%.

Tight supply see oil prices notch strong Q1 gains 

Prices were boosted chiefly by a tighter outlook for markets, as Russia, Saudi Arabia and other members of the Organization of Petroleum Exporting Countries kept ongoing production curbs in place. Russia had earlier in March said it will deepen its ongoing production cuts, while fuel supplies in the country also shrank following a series of debilitating attacks by Ukraine on Russian fuel refineries.

Few signs of a deescalation in the Israel-Hamas war, which has raised geopolitical tensions in the oil-rich Middle East region, also underpinned oil prices, as did persistent supply disruptions stemming from Houthi attacks on ships in the Red Sea. 

OPEC meets next week

Investors will watch for cues from a meeting next week of the Joint Monitoring Ministerial Committee of producer group the Organisation of Petroleum Exporting Countries amid supply concerns over ongoing geopolitical risks.

That said, the group  is unlikely to make any oil output policy changes until a full ministerial gathering in June.

Russia and Saudi Arabia, who lead the group known as OPEC+, extended their output cuts of 2.2 million barrels per day until the end of June. 

“While expectations of the group recommending any change to its supply policy are not high, any signs of members not adhering to current production quotas will be seen as a bearish sign,” ANZ Research said in a note.

(Peter Nurse, Ambar Warrick contributed to the article.)

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Commodities

Oil prices advance on tighter supply outlook

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By Ahmad Ghaddar

LONDON (Reuters) – Oil prices firmed on Thursday, following two consecutive sessions of decline, as investors saw a tighter supply outlook ahead, while the OPEC+ producer alliance was widely expected to stay the course on its current production cuts.

Brent crude futures for May were up 91 cents, or 1.1%, at $87 a barrel while the more actively traded June contract rose 75 cents, or 0.9%, to $86.16 at 1101 GMT. The May contract expires on Thursday.

U.S. West Texas Intermediate (WTI) crude futures for May delivery were up 89 cents, or 1.1%, to $82.24 a barrel.

Both benchmarks were on track to finish higher for a third consecutive month.

In the prior session, oil prices were pressured following last week’s unexpected rise in oil and gasoline inventories, driven by a rise in crude imports and sluggish gasoline demand, according to Energy Information Administration data.

However, the crude stock increase was smaller than the build projected by the American Petroleum Institute, and analysts pointed out that the increase was lower than what would be expected for this time of year.

“We … expect U.S. inventories to rise less than normal in reflection of a global oil market in a slight deficit,” SEB analyst Bjarne Schieldrop said. “This will likely hand support to the price going forward.”

Also providing support to prices were U.S. refinery utilisation rates, which rose 0.9 percentage points last week.

Recent disappointing inflation data affirms the case for the U.S. Federal Reserve to hold off on cutting its short-term interest rate target, a Fed governor said on Wednesday, but he did not rule out trimming rates later in the year.

“The market is converging on a June start to cuts for both the Fed and the European Central Bank,” JPMorgan analysts said in a note. Lower interest rates support oil demand.

Investors will watch for cues from a meeting next week of the Joint Monitoring Ministerial Committee of producer group the Organisation of Petroleum Exporting Countries (OPEC) amid supply concerns over geopolitical risks.

OPEC+ is unlikely to make any oil output policy changes until a full ministerial gathering in June.

© Reuters. An aerial view shows oil tanks of Transneft oil pipeline operator at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia June 13, 2022. Picture taken with a drone. REUTERS/Tatiana Meel

“[We] do not see any indications that the recent run-up in prices due to the heightened Russian infrastructure risk will prompt any policy reversal at next week’s JMMC meeting.” RBC analyst Helima Croft said.

“Any serious shift will likely have to wait until the June 1 ministerial meeting, and even then, we believe the group will be very judicious when it comes to unwinding any cuts.”

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Commodities

Firmer oil prices expected as demand builds and supply curbs persist: Reuters poll

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By Sherin Elizabeth Varghese

(Reuters) – Oil prices will gain some momentum this year as demand picks up and output curbs by the OPEC+ producer group continue to squeeze supply that is already being pressured by military conflicts, a Reuters poll showed on Thursday.

A survey of 46 economists and analysts forecast that would average $82.33 a barrel in 2024, up from the $81.13 consensus projection in February. expectations were raised to $78.09, up from the $76.54 forecast last month.

This was the first upward revision in 2024 consensus forecasts since the October poll.

“We see the oil price rally going further until the summer months,” said Florian Grunberger, senior analyst at data and analytics firm Kpler. “This is due to the geopolitical risk premium and the interests of OPEC+ members, coupled with increasing demand in China.”

Oil prices have added more than 12% in the quarter so far, fuelled by geopolitical tensions in the Middle East, Houthi attacks on Red Sea shipping and recent Ukrainian drone attacks on Russian refineries. [O/R]

On the demand side, the overall consensus was roughly in line with the 1.3 million barrel per day (bpd) rise for 2024 projected by the International Energy Agency.

The IEA’s forecast was far less bullish than that of OPEC, which expects demand growth at 2.25 million bpd this year and said the 2024 and 2025 growth trajectories of India, China and the United States could exceed current expectations.

“Traders have now fully absorbed the implications of the OPEC+ supply cut extensions at a time when demand is proving more robust than expected,” said Matthew Sherwood, lead commodities analyst at the Economist Intelligence Unit.

© Reuters. FILE PHOTO: A person uses a fuel nozzle to fuel up a car at a petrol station in Vienna, Austria March 18, 2022. REUTERS/Leonhard Foeger/File Photo

OPEC+ members led by Saudi Arabia and Russia are unlikely to make any oil output policy changes until a full ministerial gathering in June, three OPEC+ sources told Reuters.

“Convincing OPEC+ members to under-produce as a group to maintain oil prices above a certain level is not going to be easy,” said Suvro Sarkar, energy sector team lead at DBS Bank, pointing to rising surplus capacity and the loss of OPEC+ market share to non-OPEC+ producers such as the United States.

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