Oil Prices Rise But Trading Increasingly A ‘Tug Of War’, Says Analyst

Another volatile session in Crude Oil trading on Thursday ended with the commodity higher as schizophrenic investors now focus on multiple supply challenges rather than their main focus of late, the demand threat from lockdowns China.

West Texas Intermediate has settled $1.60 at the $103.79 per barrel while Brent rose $1.53 to $108.33.
Carsten FritschAnalyst at Commerzbanksaid: “The oil market is still characterized by a tug-of-war between demand concerns and concerns about supply disruptions; this is also reflected in the constant fluctuations in the oil price.”

Phil FlynnSenior Market Analyst Price Futures Group Inc., added: “It’s not as easy a trade as it was a few weeks ago: you have to risk more and that may be intentional with these hedge funds and also funds that trade more.”

Essentially, Thursday traders were concerned that Russian production fell due to the invasion of Russia Ukraine and subsequent sanctions from other countries, coupled with protests in Libya Blocking the smooth delivery of this country’s production.

Sure to stoke those fears were reports Thursday that the European Union strives to reduce oil consumption 220 million barrels to free the continent from its dependence on Russian energy exports.

However, given the market’s mindset, wild moves up or down are equally likely, and Flynn pointed out that the market is assessing the possibility that slowing growth or additional supply could eventually erode the bullish sentiment that has dominated trading for 2022.

Meanwhile, the market remains tense: According to the US Department of Energy Domestic inventories of distilled fuel are near 14-year lows.

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