Title: Oil Down, Set for 3% Weekly Drop Over 210-Million-Barrel Emergency Release
Apr 08, 2022 12:33AM ET
Oil prices slipped Friday morning in Asia and were on the verge of a 3% weekly loss after consumer countries agreed to release a total of 240 million barrels of oil from emergency stocks.
By 12:30 AM ET, Brent oil futures were down 0.64% at $99.94, and WTI futures were down 0.47% at $95.58.
International Energy Agency Director Faith Birol tweeted that the organization is "moving forward with a collective release of 120 million barrels (including 60 million barrels contributed by the U.S. as part of its total withdrawal from the Strategic Petroleum Reserve)." Further details on individual contributions will be announced shortly, the tweet continued.
The release will amount to about 1 million barrels per day from May to the end of 2022.
According to some investors, it could limit price increases in the short term, but would not fully offset volumes lost by Russia due to sanctions for its Feb. 24 invasion of Ukraine.
Although it is the largest release since inventories were built in 1980, it will not change the fundamentals of the oil market. It will likely delay further production increases by major producers, "ANZ Research analysts said in a note.
The release could keep producers, including the Organization of the Petroleum Exporting Countries and U.S. shale oil producers, from increasing production even with oil prices around $100 per barrel, "the note added.
Meanwhile, the European Union's (EU) consideration of a ban on Russian oil, after already imposing an embargo on Russian coal, will limit short-term losses for the black liquid.