WTI Oil steadies above $61.00 as concerns about oversupply ease

• WTI Oil pulls back from $62.00 highs but remains contained above $61.00.

• Crude prices appreciated nearly 8% this week, boosted by US sanctions on Russia.

• US crude Oil stocks dropped unexpectedly last week, pointing to strong demand.

Crude prices’ pullback from two-week highs at $62.00 witnessed on Thursday remains contained above $61.00 so far, with the commodity on track to its sharpest weekly rally in four months, as new sanctions on Russian Oil have eased market concerns about an Oil glut.

The US benchmark WTI Oil has rallied nearly 8% this week, boosted by Washington´s announcement of sanctions against Russia's largest crude producers, Rosneft and Lukoil. These measures are aimed at cutting down funding for the Russian war machine and forcing Moscow to negotiate a peace process “in good faith”.

Further sanctions on Russian Oil send prices surging

These sanctions are expected to block a significant portion of the global supply, and have calmed fears of a global oil glut, as producer countries continue to increase production, while the economic momentum of the world’s major economies suggests that global energy demand will remain subdued in the coming months.

News reports by Reuters suggest that China has suspended purchases of Russian Oil, while US President Trump affirmed earlier this week that he reached a deal with Indian President Narendra Modi to curb imports of Russian crude in exchange for lower US tariffs on imports from India, which are now taxed at 50%.

Lukoil and Rosneft had already been sanctioned by the British authorities last week. and the European Union added two refineries from China, which have a combined capacity of 600,000 barrels-per-day and Hong Kong’s China Oil to its list of restricted providers, adding pressure on Russian crude.

In this context, the US Energy Information Administration (EIA) revealed an unexpected drawdown in Oil stocks in the week of October 17. Inventories declined by 0.9 million barrels against expectations of a 1.2 million increase, pointing to a stronger-than-expected demand and providing additional support to Crude prices.