Russia Partially Pulls Back from Ukrainian Border
February 15, 2022
Yesterday, Russia’s top diplomat said more talks could resolve the current conflict. Russia has also pulled back some troops from the border, saying they are going back to their bases after completing their drills. The de-escalation has moved the energy markets lower to start today as this Russia/Ukraine conflict is the main event driving energy prices.
Credit Suisse said weak supply and high demand would keep oil prices on the rise even if worries over Russian threats to Ukraine subside. It noted that “the fundamental fact is that the market is well undersupplied in 2022. Even if geopolitical tensions ease over the next few weeks, near-term high oil prices are here to stay.”
The EIA reports US total shale regions oil production for March should increase by 109,000 BPD to 8.707 million BPD following an increase of 112,000 BPD in February. In March, US Permian Basin oil production is expected to increase by 71,000 BPD to 5.205 million BPD following a rise of 75,00 BPD in February. Meanwhile, in March, US Bakken oil production could increase by 6,400 BPD to 1.198 million BPD. EIA expects US Eagle Ford production to increase by 24,000 BPD to 1.146 million BPD following an increase of 20,000 BPD in February.
Rystad Energy said that as much as 2.2 million BPD of US shale production could be unleashed by 2023 if oil prices increase to or above $100 per barrel, driven by increasing demand and continued supply tightness.
European banks are providing billions of dollars of funding to expand oil and gas production, despite the International Energy Agency guidance against new facilities to slow global warming.
There are still a lot of bullish news stories about $100 to $125 per barrel crude oil prices out there today. But the move lower for energy prices on the news that Russia has pulled back some troops is front and center. But as we all know, we are not out of the wood, and this volatile market and situation could turn quickly.