Russia is a major exporter of raw materials, including oil and gas.
- Oil stayed below $ 100 as traders weighed in a Covid-19 outbreak in China.
- The U.S. benchmark fell the most in two years last week after the U.S. government announced a massive release of crude oil from strategic reserves to fight energy prices.
- Oil prices rose earlier in the year after Russia invaded Ukraine
Oil stabilized as traders weighed in a Covid-19 outbreak in China and the prospect of further spills from strategic oil reserves against a warning from the Vitol Group that prices were likely to fall too far.
West Texas Intermediate cleared early losses to trade above $ 99 per tonne. barrel after collapsing 13% last week. China is struggling with a renewed coronavirus outbreak that is hurting oil demand. Shanghai’s 25 million inhabitants are almost all under one form or another shutdown as the country added more than 13,000 daily infections, with state media reporting a case infected with a new subtype.
The US benchmark fell the most in two years last week after the Biden administration announced a massive release of crude oil from strategic reserves to combat energy prices that have been lifted by Russia’s invasion of Ukraine. Allies within the International Energy Agency will also address stocks, with details expected this week. Following the US move, Goldman Sachs Group Inc. compared the price forecasts, while remaining largely positive on the oil outlook.
“It looks like the US SPR movement broke the crude oil rally,” said Vandana Hari, founder of Vanda Insights in Singapore. “A slight easing on the supply front naturally gives room for the market to take into account demand concerns in the wake of continued outbreaks and shutdowns in China.”
Still, leading players are cautious. Vitol, the world’s largest independent crude oil trader, said at the weekend that prices had fallen to levels that did not reflect risks, including disruption to Russian exports.
Investors will also gain a clearer insight into OPEC + heavyweight Saudi Arabia’s perspective in the coming days as Saudi Aramco releases official May pricing sales prices. A Bloomberg survey among traders and refineries suggested that the price of their main Arab Light quality to Asia may rise to record as some buyers seek alternatives to Russian crude oil due to the war.
Last week, the Organization of the Petroleum Exporting Countries and its allies, including Russia, approved another modest increase in production, despite calls from consumers to release the taps at a faster pace.
- West Texas Intermediate for delivery in May rose 0.1% to $ 99.40 per barrel on the New York Mercantile Exchange at 11:37 in Singapore. Futures fell 13% last week, the largest weekly percentage loss since April 2020.
- Brent for the June settlement added 0.1% to $ 104.51 per share. barrel on the ICE Futures Europe exchange.
Oil markets remain in decline, a bullish pattern, although differences have narrowed. Brent’s prompt spread – the gap between the two closest contracts – was $ 1.51 per barrel in backwardation, up from $ 2.99 a week ago.
Traders are also tracking down stop-start negotiations to restore a 2015 nuclear deal with Iran after Tehran said it was close to reaching an agreement with the United States. If concluded, a pact could increase official Iranian crude oil exports.