- Oil extends gains to trade above $89/Bbl
- Prices were supported by recent weakness in the dollar and tightness in the product market
- The USD Index (DXY – a proxy for U.S. Dollar strength against a basket of other international currencies) fell to its lowest in four weeks yesterday
- A weaker dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay less for the same amount of goods
- The EIA reported yesterday that U.S. crude and fuel exports reached a record-high 11.4 MMBbl/d last week amid very low seasonal fuel inventories
- U.S. officials’ plan to impose a price cap on Russian crude may have to be scaled back amid investor skepticism and market volatility (BBG)
- The U.S. and EU are likely to settle for a loosely enforced cap at a higher price than previously envisioned, with just the G7 nations and Australia committed to adhering to it, according to people familiar with the matter
- An earlier version of the U.S. plan, which has been led by Treasury Secretary Janet Yellen, called for a large "buyer's cartel" of countries to adhere to a price cap of $40/Bbl to $60/Bbl
- The price cap is expected to be announced in its final form before Dec. 5, when EU sanctions are set to take effect
- The world is facing its “first global energy crisis,” with Russia's invasion of Ukraine acting as the catalyst for “full-blown energy turmoil,” according to the IEA's annual World Energy Outlook report (BBG)
- IEA Director Fatih Birol added that “energy markets and policies have changed as a result of Russia’s invasion of Ukraine”
- The group forecasts demand for all fossil fuels to plateau in the middle of this decade as governments continue to shift their focus toward renewable energy
- They added that demand would peak at 103 MMBbl/d in the middle of the next decade and then gradually decline through 2050
- The bloc also estimates that Russia’s share of global energy markets will be reduced by 50% by 2030