WTI rallies to fresh weekly highs in $114.00 area amid Russian CPC pipeline outage concerns

• The oil bulls remain in control with WTI up more than $5.0 on the day in the $114.00 area.
• WTI has now recovered more than 50% of its pullback from multi-year highs near $130 to $93 earlier this month.
• Traders have cited a major Russian pipeline outage, a bullish US inventory report and expectations for more sanctions as bullish.

With the bulls seemingly now very much back in charge in global oil markets, front-month WTI futures are trading near session highs in the $114.00 area. Prices are up more than $5.50 on the day, taking on-the-week gains to more than $9.0 and signifying that WTI has now recovered more than 50% of its pullback from earlier monthly highs in the $130 area to as low as the $93 region. Traders are pointing to an announcement from Russia that more than 1M barrels per day (over 1% of global supply) in exports via its Caspian Pipeline Consortium (CPC) pipeline, which runs through Khazakstan, has been halted due to storm-damaged berths.

“Prices are primarily rising on the loss of CPC Blend crude exports out of Novorossiisk, which accounts for about 1.3 million barrels per day of exports, adding further bullish fuel to the fire as the drop in Russian crude exports finally appears underway,” said an analyst at Kpler. The immediate drop in Russian exports as a result of apparent maintenance issues comes against the backdrop of severe sanctions placed by Western nations on the Russian economy in response to its invasion of Ukraine.

And more sanctions may well be forthcoming in the next few days, with EU nations reportedly split over to implement a Russian oil import ban and with US President Joe Biden set to arrive in the EU on Wednesday. The US President will take part in a series of emergency NATO and EU summits as leaders. “You'll know at the end of April what the total loss of Russian oil is” said Trafigura's Ben Luckock at the FT Commodities Global Summit, who predicted record backwardation and that WTI could hit $150 by Summer and $200 at a later date.

Elsewhere, the latest official weekly US inventory figures were bullish, with headline crude oil inventories posting a larger than expected draw of more than 2.5M barrels and gasoline stocks also falling by more than expected. US production, meanwhile, remained unchanged at 11.6M barrels per day. Oil prices saw modest upside in wake of the data, but WTI was unable to break convincingly back above $115.00.