image

Oil dives 4%, below $100 on China lockdowns, reserves release plan

U.S. West Texas Intermediate (WTI) closed at its lowest since Feb. 25, the day after Russian forces invaded Ukraine, an action Moscow calls a “special military operation.”

Brent futures fell $4.30, or 4.2%, to settle at $98.48 a barrel, while WTI crude fell $3.97, or 4.0%, to settle at $94.29. It was the lowest close for Brent since March 16.

Fuel consumption in China, the world’s biggest oil importer, has stalled with COVID-19 lockdowns in Shanghai, analysts at the Eurasia Group consultancy said. Shanghai, China’s financial center, started easing lockdowns in some areas on Monday despite reporting a record of more than 25,000 new COVID-19 infections.

“Even when the restrictions in Shanghai are lifted, China’s zero-Covid policies will likely remain a drag on demand,” Eurasia Group said, noting Shanghai lockdowns likely reduced China’s overall oil consumption by up to 1.3 million barrels per day (bpd).

To help offset a shortfall in Russian crude after Moscow was hit with sanctions, IEA member nations, including the United States, will release 240 million barrels of oil over the next six months.

The release of Strategic Petroleum Reserve (SPR) volumes equals 1.3 million bpd over the next six months, enough to offset a shortfall of 1 million bpd of Russian oil supply, analysts at JP Morgan said.

“The (SPR) release will be the largest of all time, and has already broken the back of the WTI price curve,” said Robert Yawger, executive director of energy futures at Mizuho, noting the spreads were sliding toward contango.

Contango signals an oversupplied market. It is when prices for later-dated months are higher than the front-month.

In contrast, when concerns about supply shortages were high in early March, the WTI curve was in what Yawger called “super-backwardation” with each month at least $1 a barrel below the prior month through November 2023.

Adding pressure to crude prices, the U.S. dollar was on track to strengthen for an eighth straight day against a basket of other currencies. A stronger dollar makes oil more expensive for holders of other currencies.

In a move that could tighten global oil supplies, the European Union’s (EU) executive is drafting proposals for an embargo of Russian oil, although there was still no agreement to ban Russian crude.

The Organization of the Petroleum Exporting Countries (OPEC) told the EU that sanctions on Russia could create one of the worst-ever oil supply shocks and it would be impossible to replace those volumes. OPEC signaled it would not pump more oil.

U.S. President Joe Biden and Indian Prime Minister Narendra Modi held talks on Monday as Washington pushed its Asian ally to support its response to Russia’s invasion.

India, the world’s third-biggest oil importer, has increased purchases of Russian crude in recent months because Moscow has been forced to sell its oil at a steep discount since invading Ukraine.

Fuel demand in India rose to a three-year high in March, with petrol sales hitting an all-time peak.

(Additional reporting by Bozorgmehr Sharafedin in London, Florence Tan and Isabel Kua in Singapore and David Gaffen in New York; Editing by David Goodman, Mark Potter, Will Dunham and David Gregorio)


Source link

0 0 votes
Article Rating

 
S’abonner
Notifier de
0 Commentaires
Commentaires en ligne
Afficher tous les commentaires
Reset Password

Avertissement sur les risques :

Le trading peut vous exposer à des risques de pertes supérieures aux dépôts et ne convient qu’à une clientèle avisée ayant les moyens financiers de supporter un tel risque. Les CFD sont des instruments complexes et présentent un risque élevé de perte rapide en capital en raison de l’effet de levier. Entre 74 et 89% des comptes de clients de détail perdent de l’argent lors de la négociation de CFD. Vous devez vous assurer que vous comprenez comment les CFD fonctionnent et que vous pouvez vous permettre de prendre le risque élevé de perdre votre argent. Ce site n’est en aucun cas une offre de conseil en investissement ni une incitation quelconque à acheter ou vendre des instruments financiers. Trader le Forex et/ou les CFD’s implique un niveau de risque élevé, et peut ne pas être approprié car vous pouvez subir des pertes supérieures à votre dépôt. L’effet de levier peut être en votre défaveur.

Vous devez être conscient et avoir une compréhension complète de tous les risques associés au marché et au trading. Le site Union-trader.com peut être amené à produire des commentaires d’ordre général, ce qui ne constitue pas des conseils en investissement et ne doit pas être interprété comme tel.

Veuillez recourir aux conseils d’un conseiller financier extérieur. Le site Union-trader.com décline toute responsabilité pour les erreurs, inexactitudes ou omissions et ne garantit pas l’exactitude ou le caractère complet des informations, textes, graphiques, liens ou autres éléments contenus dans cette documentation. Toute information et toute mise à disposition sur le site ont un caractère privé.