An oil and gas pump jack is seen near Granum, Alberta, Canada, May 6, 2020. REUTERS/Todd Korol/File Photo
- IEA members release 60 million barrels over 6 months
- US producers added 13 rigs in the week ended April 8th
- Shanghai extends lockdown to deal with COVID-19
- Brent fell 1.5% last week while WTI fell 1%
April 11 – Oil prices slipped by more than $2 a barrel on Monday after consumers around the world announced plans to release a record amount of crude and oil products from strategic stocks and as China continued the lockdown.
Brent crude was down $2.32, or 2.3%, to $100.46 a barrel by 0427 GMT, while US West Texas Intermediate crude was down $2.37, or 2.4%, to $95.89. Last week, Brent fell 1.5% while US oil fell 1%. For several weeks, the benchmarks have been at their most volatile since June 2020.
The market has been watching developments in China, where authorities have locked down Shanghai, a city of 26 million people, as part of their “zero tolerance” policy for COVID-19. China is the world’s largest oil importer.
Concerns about China’s growth are the main reason for today’s drop in oil prices, as the lockdown in Shanghai shows no signs of lifting and Guangzhou looks to start mass virus testing, said Jeffrey Halley, senior market analyst at OANDA.
“Now fears are growing that as China’s omicron wave spreads to other cities, its zero-COVID policy will lead to en masse extended lockdowns, negatively impacting both industrial production and domestic consumption,” he added added.
International Energy Agency (IEA) member nations will release 60 million barrels over the next six months, with the United States adding to that amount as part of its 180 million barrel release announced in March. The moves are aimed at making up for a shortage of Russian crude oil after Moscow was hit with heavy sanctions following its invasion of Ukraine. Continue reading
“We anticipate these Strategic Petroleum Reserve (SPR) volumes – totaling approximately 273 million barrels and 1.3 million barrels per day (mbd) over the next six months – will be a major contributor in the near term to around 1 mbd of Russian oil, which we expect to remain permanently offline,” analysts at JP Morgan said in a statement.
However, it is unclear whether this will fully offset the shortage of Russian oil as exports continue while India, lured by heavy rebates, increases imports.
On Monday, President Joe Biden will meet Indian Prime Minister Narendra Modi virtually, the White House said, at a time when the United States has made clear it does not want to see a surge in Russian energy imports through India. Continue reading
In the United States, energy companies last week added oil and natural gas rigs for the third straight week as Washington seeks more production to help its allies wean itself off of Russian oil and gas. Continue reading
Reporting by Florence Tan and Isabel Kua in Singapore; Additional reporting by David Gaffen in New York; Edited by Muralikumar Anantharaman