Title: Oil drops below $100 on reserves release and China lockdowns
Apr 11, 2022 09:50AM ET
Oil prices fell $4 a barrel on Monday, with Brent crude dipping below $100 on plans to release record amounts of crude and petroleum products from strategic stockpiles and ongoing closures over the coronavirus in China.
At 1341 GMT, the price of Brent crude for June delivery was down $4.29, or 4.2%, at $98.49 a barrel. U.S. West Texas Intermediate crude lost $4.33, or 4.4%, to $93.93.
Bank of America maintained its forecast that Brent crude will sell for an average of $102 a barrel in 2022-23, but cut its summer forecast to $120. Swiss investment bank UBS also cut its June forecast for Brent crude by $10 to $115 per barrel.
International Energy Agency member states will release 60 million barrels over the next six months, with the United States matching them in the 180-million-barrel release it announced in March.
The release of volumes from the Strategic Petroleum Reserve is equivalent to 1.3 million barrels per day over the next six months and will be enough to offset a 1 million barrel per day shortfall in oil supplies from Russia, according to JP Morgan analysts.
The European Union executive is working on proposals for a possible EU oil embargo against Russia, the foreign ministers of Ireland, Lithuania and the Netherlands said on Monday, although there is no agreement yet on a ban on Russian oil.
The market is also watching developments in China, where authorities are keeping the city of 26 million in Shanghai under lockdown as part of their "zero tolerance" policy towards COVID-19. It was announced that Shanghai will ease closures in some areas from Monday.
Fuel demand in India, the world's third-largest importer and consumer of crude oil, rose to a three-year high in March, with petrol sales hitting a record high.