MELBOURNE/BEIJING: An expected release of 240 million barrels from emergency stockpiles by consuming nations mitigated some fears about decreased supply from Russia because of Western sanctions.
Earlier, Brent oil futures had gained more than $1 in the early hours of the morning before slipping back 55 cents or 0.6 percent to $100.03 a barrel at 0403 Gmt.
The price of US West Texas Intermediate (WTI) oil futures fell by 34 cents, or 0.4%, to $95.67.
However, if other nations apply sanctions against Russia over its invasion of Ukraine, which Moscow terms a “special operation,” the emergency oil flow of around 1 million barrels per day from May through the end of the year may limit price increases for the imminent term.
“Although this is the largest release since they established the stockpile in 1980, the fundamentals of the oil market will remain unchanged. It’s possible that important manufacturers would defer future increases in output.” An analyst report from ANZ Research echoed these sentiments.
The OPEC and US shale producers, among others, may be discouraged from increasing output even if oil prices are around $100 a barrel because of the release, they added.
Because of the newest wave of coronavirus virus, cities throughout China have been quarantined, and Russian oil supplies are no longer available. Investors are evaluating the fundamentals of the oil market.
Analysts from Haitong Futures remarked, “Only time can offer a clear explanation.”
CNPC-affiliated research tank has decreased its forecast on China’s second-quarter oil consumption by 180,000 BPD from its previous estimate.
Additionally, the EU’s contemplation of a ban on Russian oil, following its proposal to embargo Russian coal, will keep oil prices from falling for the foreseeable future.
There is rising public pressure on Brussels to act, and Brent crude could reach $120 in a heartbeat if the EU bans Russian oil, according to Stephen Innes, managing director of SPI Asset Management.
