Crude oil prices fell in early Asian trade, falling for the second week in a row, as world customers revealed plans to release crude from strategic inventories and Chinese lockdowns remained in place.
Brent crude was down 38 cents to $102.40 a barrel at 2202 GMT, while US crude was down 16 cents to $98.18. Brent fell 1.5 percent last week, while US West Texas Intermediate fell 1%. The benchmarks have been at their most volatile level since June 2020 for many weeks.
The market has been following events in China, where authorities have declared “zero tolerance” for Covid-19 in Shanghai, a metropolis of 26 million people. China is the world’s largest importer of oil.
Over the following six months, member countries of the International Energy Agency (IEA) will release 60 million barrels, with the US matching that quantity as part of its 180 million barrel release announced in March.
According to ANZ Research analysts, the announcement might dissuade producers, particularly OPEC and US shale producers, from increasing output even if prices are around $100 a barrel.
The OPEC+ group of oil exporting countries, on the other hand, has showed no sign of increasing its output objectives beyond the 400 000 barrels per day it has been adding monthly as part of restoring supply curbs.
The IEA release would provide almost 2 million barrels per day of supplies for the next two months, plus another 1 million bpd from the US for the next four months. It’s uncertain if this would compensate for the shortage of Russian crude following the country’s invasion of Ukraine, which was met with harsh sanctions.
From March 1 to 6, Russia’s oil and gas condensate output declined to 10.52 million barrels per day (bpd) from an average of 11.01 million bpd in March.