- Oil set to post a weekly gain amid expectations of a drop in Russian crude supply
- Feb '23 WTI gained nearly $2 this morning to trade above $79/Bbl
- Russia threatens to cut production in response to the $60/Bbl EU-G7 price cap
- However, demand uncertainty persists as China struggles with surging COVID infections after abandoning its Covid-zero policy
- AEGIS notes that China's swift reversal of its Covid-zero policy has given rise to optimism for the long-term demand, although the near-term forecast remains uncertain
- Another notable event is the first significant winter storm of the year that has been affecting large parts of the U.S., canceling thousands of flights and possibly interfering with motorists' holiday travel plans
- This might likely lead to decreased demand for gasoline and jet fuel, but it may also increase demand for heating oil, making it difficult to estimate the overall impact at this time
- Russia makes a production cut threat in 1Q2023 in retaliation to the $60/Bbl EU-G7 price cap (BBG)
- Moscow may cut its oil production by 0.5 to 0.7 MMBbl/d in reaction to the G7 nations' price cap on Russian crude exports, said Russian Deputy Prime Minister Alexander Novak in an interview with the Rossiya-24 TV channel
- Additionally, Russian President Vladimir Putin told reporters he would sign a decree on the nation's response to the price cap on its crude on Monday or Tuesday
- The price cap is "a path toward destruction of global energy," and there would be "preventative measures," added Putin
- Analysts estimate a loss of 0.5 to 1.5 MMBbl/d of Russian output due to the sanctions and the price cap