On preparations for major stockpile releases, a demand-sapping virus epidemic in top importer China, and a hawkish turn from the US Federal Reserve, crude oil fell for the second week in a row.
Prices for West Texas Intermediate fell below $96 a barrel this week, down more than 3%. Because of the current decrease, the US benchmark has already given up the majority of its gains since Russia’s invasion of Ukraine began in late February.
Concerned about the rise in oil prices caused by Moscow’s attack, the US and its allies have announced plans to sell over a quarter-billion barrels from strategic petroleum reserves. With France, the United Kingdom, and others supporting the move, formerly elevated time spreads have collapsed.
On expectations for major inventory releases, a demand-sapping virus epidemic in top importer China, and a hawkish turn from the US Federal Reserve, crude oil was heading for a back-to-back weekly decline.
This week, the price of West Texas Intermediate fell below $96 a barrel, a drop of more than 3%. Since Russia’s invasion of Ukraine began in late February, the US benchmark has erased the majority of its gains.
Concerned about the rise in oil prices caused by Moscow’s offensive, the US and its allies have announced plans to sell about a quarter-billion barrels from strategic petroleum reserves. With France, the United Kingdom, and others supporting the move, formerly high time spreads have collapsed.
At 12:05 p.m. in Singapore, West Texas Intermediate for May delivery lost 0.4 percent to $95.67 a barrel on the New York Mercantile Exchange. On the ICE Futures Europe platform, Brent for June delivery fell 0.5 percent to $100.08 a barrel.
While many western firms are avoiding Russian oil as a result of the invasion, Asia, particularly China and India, has plenty of ready buyers. Russian Sokol crude cargoes from the Far East have sold out for the coming month.
Oil markets remain in backwardation — a bullish pattern marked by near-term prices above longer-dated ones — but differentials have collapsed. Brent’s prompt spread, the difference between its two nearest contracts, has plunged to 65 cents a barrel in backwardation from more than $3 two weeks ago.
China’s latest coronavirus outbreak shows no sign yet of abating, disrupting Asia’s largest economy. Cities including the commercial hub of Shanghai are facing severe restrictions, curbing mobility and energy consumption.