WTI sees stability above $107.00 as the EU portends an embargo on Russian oil within six months

• WTI has advanced sharply higher as the odds of a Europe’s embargo on Russian oil bolstered.
• The EU may phase out the dependency on Russian oil within six months.
• The US EIA has reported an unexpected rise in oil inventories by 1.2 million barrels.

West Texas Intermediate (WTI), futures on NYMEX, have surged above $107.00 as the fears of an embargo on Russian oil by the largest trading bloc, European Union (EU), renewed. The EU, on Wednesday, spelled out its plans to prohibit Russian oil imports. This has raised concerns over the supply catalyst in an already tight oil market as a prohibition of Russian oil due to its invasion of Ukraine from 3.5 million barrels per day (bpd) customer will worsen the demand-supply mechanism.

Although the EU is indicating an embargo on Russian oil within six months, a lot of questions have been raised with respect to the alternatives to fulfilling the bumper demand of oil by Europe. Inventories are so tight in the oil market considering the falling stockpiles in US Strategic Reserves and OPEC’s sticky indication to the closed deal of discussed oil supply, along with their intention to sustain oil prices above the psychological mark of $100.00.

On the demand front, oil prices have ignored the build-up of unexpected oil stockpiles last week. The US Energy Information Administration (EIA) reported the oil inventories at 1.2 million barrels despite the release of oil from its strategic reserves. Going forward, investors will keep an eye on the OPEC meeting, which is due on Thursday. The OPEC cartel is not expected to shore up the global supply and will maintain its price stability above $100.00.