Oil prices settled lower on Thursday, adding to weekly losses due to uncertainty over the euro zone’s ability to impose effective sanctions on Russia’s energy exports, and following consuming nations announced massive oil withdrawals from emergency reserves.
Prices were also pressured by concerns that the shutdown in China due to a new wave of Covid-19 would slow the recovery of oil demand.
Brent crude futures fell 49 cents, or 0.5 percent, to settle at $100.58 a barrel, while US West Texas Intermediate crude fell 20 cents, or 0.6 percent, to settle at $96.03 a barrel. In the previous session, both benchmarks fell more than five percent to their lowest closing levels since March 16.
EU foreign policy chief Josep Borrell told a NATO meeting that new measures taken by the bloc, including a ban on Russian coal, might be passed on Friday, and that the bloc would discuss an oil embargo next time. In China, the virus outbreak has led to widespread lockdowns in Shanghai, its most populous city.
Meanwhile, member states of the International Energy Agency agreed on Wednesday to withdraw 60 million barrels, on top of the 180 million that the United States announced last week to help lower fuel prices. Which brings the total to 240 million barrels.
Oil futures fell sharply, on Wednesday, and the pace of sales in the oil market accelerated near the closure, which prompted the global benchmark Brent and the US West Texas Intermediate to record their lowest closing levels since March 16. Brent contracts settled at $101.07 a barrel, down $5.57, or 5.2 percent.
US crude contracts closed down $5.73, or 5.6 percent, to $96.23 a barrel.
This is the second time that the International Energy Agency has released oil from reserves this year and has effectively boosted global supply by regarding 2 million barrels per day for at least the next two months as the world tries to cope with the potential loss of Russian oil. The group collectively has regarding 1.5 billion barrels in strategic reserves.
On the other hand, the minutes of the latest Federal Reserve meeting showed that the US central bank had intended to raise interest rates by 50 basis points in most of its recent meetings, but chose a smaller increase due to the war in Ukraine.
The minutes of the meeting indicated a hawkish approach by the Fed while trying to curb inflation, which gave a boost to the US dollar. Oil prices often move in the opposite direction to the dollar because most oil deals are made in the green currency.
The oil market was also negatively affected by an increase of 2.4 million barrels in US crude stocks last week, while analysts had expected a decrease. US oil production also rose, recording 11.8 million barrels per day, the highest since late 2021 and is expected to continue to rise.
The United States also released regarding four million barrels of strategic reserves in the past week.
(Archyde.com)
