Oil from 7-week low, but under pressure as release of reserves eyed

A worker collects a crude oil sample at an oil well operated by Venezuela’s state oil company PDVSA in Morichal, Venezuela, July 28, 2011. REUTERS / Carlos Garcia Rawlins

Sign up now for FREE unlimited access to reuters.com

  • The US is again pushing OPEC + while weighing the reserve release
  • Japan signaled that they were ready to help with the release of reserves
  • 6-month Brent spread hits the lowest since mid-September

SINGAPORE, November 22 (Reuters) – Oil prices fell from a seven-week low on Monday, but remained under pressure after Japan said it was considering releasing oil reserves, and as the COVID-19 situation in Europe worsened, it raised concerns for both oversupply and weak demand.

Brent lost 14 cents, or 0.2%, to $ 78.75 per share. barrel from 0502 GMT, and US West Texas Intermediate (WTI) crude oil futures fell 4 cents to $ 75.90 per barrel. barrel.

The market is in a bit of a change as strategic oil reserves (SPR) releases are not fully priced yet, said an oil trader in Singapore.

Sign up now for FREE unlimited access to reuters.com

WTI and Brent prices hit their lowest since October 1 earlier in the session. They fell by about 3% on Friday and fell for the fourth week in a row for the first time since March 2020.

Japanese Prime Minister Fumio Kishida signaled on Saturday that he was ready to help combat rising oil prices following a request from the United States to release oil from their emergency stockpile, in an unprecedented move.

Tokyo is investigating ways to circumvent a law that only allows the release of oil reserves in the event of a shortage of supplies or natural disasters. Read more

The White House on Friday pressured the OPEC producer group again to maintain adequate global supply, a few days after US talks with some of the world’s largest economies about potentially releasing oil from strategic reserves to curb high energy prices. Read more

The combined SPR release could be 100 million to 120 million barrels or even higher, Citi analysts said in a note dated Nov. 19. This includes 45 million to 60 million barrels from the United States, about 30 million barrels from China, 5 million barrels from India and 10 million barrels each from Japan and South Korea, the bank estimated.

“If released during December and January, this could mean looser markets at around 1.5-2.0 mb / d. This would be based on expected stock draws of 2.8 mb / d on December 21 and 0.5. mb / di January 22 without any SPR release, “said Citi.

Further weighting of prices was possible renewed lockdowns in Europe as COVID-19 cases rose again. Germany warned on Friday that it might be necessary to go to a full shutdown after Austria said it would reintroduce strict measures to tackle rising infections.

The worsening Europe COVID-19 situation and profit-taking among investors towards the end of the year contributed to the uncertainty in the market, the trader said.

“Profit-taking has turned into a price drop,” he said, adding that prices are likely to go sideways until January before rising.

Money managers cut their net long U.S. futures and options positions in the week to November 16, the U.S. Commodity Futures Trading Commission said Friday.

Investors also followed developments in the Middle East after Saudi state media reported early Monday that the Saudi-led coalition fighting the Iran-backed Houthi movement in Yemen said it was discovering indications of an imminent danger to navigation and global trade. south of the Red Sea. Read more

Sign up now for FREE unlimited access to reuters.com

The 6-month repayment structure for Brent and WTI – where immediate delivery contracts are more expensive than those for later periods – is narrowing sharply, indicating reduced market tightness in the short term

Reporting by Sonali Paul, Naveen Thukral and Florence Tan; Editing Sam Holmes and Muralikumar Anantharaman

Our standards: Thomson Reuters trust principles.

.

Give a Comment