Russia has diverted supplies and the European spring will have to wait

The oil price remains stable after a large fall in US inventories. Oil prices rose on Thursday amid ongoing unrest in Iraq and as a sharp decline in US crude inventories signaled healthy demand. US commercial crude oil inventories fell by 7.5 million barrels last week to 473.7 million barrels. The decrease in stocks indicates an increase in energy demand ahead of the summer season. 

 

Russia's selling of crude oil at $60 a barrel or lower has been cited as a reason for the oil markets inability to command a consistently high price for WTI and brent. Major buyers such as China and India have sourced cheap supplies from Russia and cut back on suppliers from higher-priced producers. Russia has entered into a long-term agreement on the supply of oil to India, and in the face of western sanctions, Russia has diverted supplies elsewhere.  

 

US natural gas prices have seen what appears to be their biggest drop in a quarter, with a loss of more than 50% for the December-March period. This is due to an unusually warm winter which has led to a large stockpile of fuel that was used for heating. 

 

The weather forecast shows colder-than-normal temperatures across much of Europe in the early part of the current month and demand is beginning to increase after the steep decline in prices in the last couple of months. However, considering that Europe gas storage is well above average, natural gas prices could struggle to rebound on a sustainable basis.