Speculators continue to sell WTI – ING

Oil prices settled lower last week despite growing European calls for secondary sanctions on buyers of Russian oil and gas, ING's commodity experts Ewa Manthey and Warren Patterson note.

Ukraine continues to target Russian energy infrastructure

"The mild reaction may suggest the market is becoming increasingly numb towards sanction risks. And that to be effective, sanctions would likely need US backing. Up until now, the US has only imposed secondary tariffs on India for its purchases of Russian oil, not other key players like China. While some leaders in Europe are pushing for sanctions on buyers of Russian energy, the EU remains a significant buyer of natural gas from Russia, both in the form of pipeline gas via TurkStream, as well as LNG shipments."

"The latest positioning data show that speculators bought 23,848 lots of ICE Brent over the last reporting week, leaving them with a net long position of 206,543 lots, a move predominantly driven by fresh buying. Meanwhile, for NYMEX WTI, speculators continue to sell, reducing net longs by 5,461 lots to 24,225 lots. This is the smallest position that speculators have held since January 2007. The market remains focused on expectations for a substantial surplus through 2026."

"Ukraine continues to target Russian energy infrastructure; it claims to have struck refineries in Krasnodar and Syzran. Ukrainian drone attacks on Russian energy infrastructure through August led to a spike in domestic fuel prices and saw the government extend a ban on gasoline exports. If these attacks intensify, it could support product cracks. This could potentially lead to lower export volumes of refined products and increased exports of crude oil, resulting from lower domestic refinery runs."