Oil settles lower as halted Russian pipeline flows appear to be temporary, demand concerns grow

A poster with crude oil written on the side of a storage tank in the Permian Basin in Menton, Loving County, Texas, United States, November 22, 2019. REUTERS/Angus Mordant

NEW YORK (Reuters) – Oil prices settled slightly lower on Tuesday after a volatile session as fears of a slowing economy that could slash demand competed with news that some oil exports had been suspended on the Druzhba pipeline from Russia to Europe. that crosses Ukraine.

Crude oil prices have been under pressure for weeks as fears mounted that a recession could reduce demand for oil.

Brent crude closed at $96.31 a barrel, losing 34 cents, or 0.4 percent. US West Texas Intermediate crude settled at $90.50 a barrel, down 26 cents, or 0.3%. During the session, both benchmarks rose and fell by more than $1 a barrel.

Ukraine has halted oil flows on the Druzhba oil pipeline to parts of central Europe because Western sanctions prevented a payment from Moscow from passing through for transportation fees.

Flows along the southern route of the Druzhba pipeline were affected while the northern route serving Poland and Germany was not interrupted.

Oil initially rose on the pipeline news and expectations that the shutdown would cut supplies, but prices reversed course as details became clearer about the cause of the outage and that flows were expected to resume within days. Read more

“Given the fact that it is not the Russian side closing the pipeline, but the Ukrainian side, the situation will be able to be resolved sooner rather than later,” said Bob Yoger, director of energy futures at Mizuho in New York. note.

Prices have come under pressure from talks of a last-ditch effort by European countries to revive the Iran nuclear deal. On Monday, the European Union put forward a “final” text to revive the 2015 Iran deal. A senior EU official said a final decision on the proposal, which needs US and Iranian approval, was expected in “a very, very few weeks.”

Talks continued for months without agreement.

According to tanker trackers, Iran’s crude oil exports are at least 1 million barrels per day below their level in 2018 when former US President Donald Trump withdrew from the nuclear deal.

Oil is now down more than $40 from its peak in the wake of the Russian invasion of Ukraine, which briefly raised the price of Brent crude to $139 a barrel.

US crude oil inventories were also indicating slowing demand, according to market sources citing American Petroleum Institute figures. Crude stocks rose by 2.2 million barrels in the week ending August 5th. Analysts had expected a slight decrease of 400,000 barrels in crude stocks. Official government data is due on Wednesday at 10:30 a.m. ET.

Additional reporting by Alex Lawler, Sonali Paul and Emily Chow; Editing by Louise Heavens, Mark Potter, Barbara Lewis and David Gregorio

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