Oil drifts lower on planned release of emergency stocks
Brent crude futures fall amid concerns the release by consuming countries may deter producers
08 April 2022 - 07:57
bySonali Paul
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Oil drums are shown near industrial plants and manufacturing facilities in the Keihin industrial area in Kawasaki, Kanagawa Prefecture, Japan. File photo: BLOOMBERG/SOICHIRO KORIYAMA
Melbourne/Beijing — Oil prices drifted lower on Friday and were set to drop about 3% for the week as consuming countries’ planned release of 240-million barrels from emergency stocks offset some concerns over reduced supplies from Russia due to Western sanctions.
Brent crude futures edged lower by 55c, or 0.6%, to $100.03 a barrel at 4.03am GMT after gaining more than $1 earlier.
US West Texas Intermediate (WTI) crude futures lost 34c, or 0.4%, to $95.67 a barrel.
Analysts said the emergency oil release, amounting to about 1- million barrels per day from May to the end of the year, might cap price rises in the short term, but would not fully cover volumes lost if more countries impose sanctions against Russia over its invasion of Ukraine, which Moscow calls a “special operation”.
“Although this is the biggest release since the stockpile was created in 1980, it will fail to ultimately change the fundamentals in the oil market. It is likely to delay further increases in output from key producers,” ANZ Research analysts said in a note.
The release may deter producers, including Opec and US shale producers, from accelerating output increases even with oil prices around $100 a barrel, they said.
Investors are also assessing the fundamentals in the oil market amid uncertainties over slowing demand in China, where cities have been locked down due to the latest wave of coronavirus infections, and the loss of supplies from Russia.
“Only time can give a clear answer,” said analysts from Haitong Futures.
A think-tank affiliated to China’s state-backed CNPC lowered its view on the country’s second-quarter oil demand by 180,000 barrels per day from its previous estimate due to the lockdowns there.
At the same time, the EU’s consideration of a ban on Russian oil, after its plan to embargo Russian coal, will limit any drop in oil prices in the near term.
“In the court of public opinion, pressure is mounting on Brussels to act, and if that pressure valve pops and the EU sanctions Russian oil, we could see Brent crude at $120 in a heartbeat,” Stephen Innes, MD of SPI Asset Management, said in a note.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil drifts lower on planned release of emergency stocks
Brent crude futures fall amid concerns the release by consuming countries may deter producers
Melbourne/Beijing — Oil prices drifted lower on Friday and were set to drop about 3% for the week as consuming countries’ planned release of 240-million barrels from emergency stocks offset some concerns over reduced supplies from Russia due to Western sanctions.
Brent crude futures edged lower by 55c, or 0.6%, to $100.03 a barrel at 4.03am GMT after gaining more than $1 earlier.
US West Texas Intermediate (WTI) crude futures lost 34c, or 0.4%, to $95.67 a barrel.
Analysts said the emergency oil release, amounting to about 1- million barrels per day from May to the end of the year, might cap price rises in the short term, but would not fully cover volumes lost if more countries impose sanctions against Russia over its invasion of Ukraine, which Moscow calls a “special operation”.
“Although this is the biggest release since the stockpile was created in 1980, it will fail to ultimately change the fundamentals in the oil market. It is likely to delay further increases in output from key producers,” ANZ Research analysts said in a note.
The release may deter producers, including Opec and US shale producers, from accelerating output increases even with oil prices around $100 a barrel, they said.
Investors are also assessing the fundamentals in the oil market amid uncertainties over slowing demand in China, where cities have been locked down due to the latest wave of coronavirus infections, and the loss of supplies from Russia.
“Only time can give a clear answer,” said analysts from Haitong Futures.
A think-tank affiliated to China’s state-backed CNPC lowered its view on the country’s second-quarter oil demand by 180,000 barrels per day from its previous estimate due to the lockdowns there.
At the same time, the EU’s consideration of a ban on Russian oil, after its plan to embargo Russian coal, will limit any drop in oil prices in the near term.
“In the court of public opinion, pressure is mounting on Brussels to act, and if that pressure valve pops and the EU sanctions Russian oil, we could see Brent crude at $120 in a heartbeat,” Stephen Innes, MD of SPI Asset Management, said in a note.
Reuters
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