Title: Oil rises from 3-week low as tight supply concerns linger

Apr 07, 2022 01:26AM ET

By: AnalysisWatch

Oil prices rose on Thursday from a three-week low reached in the previous session after consuming countries announced the release of large amounts of crude from emergency reserves, with concerns over tight supply still clouding the market outlook.

At 11:42 PM ET, Brent crude futures climbed $1.48, or 1.5%, at $102.55 a barrel, while U.S. West Texas Intermediate crude futures risen $1.26, or 1.3%, to $97.49 a barrel.

Both benchmarks had fallen more than 5% in the previous session, hitting their lowest closing levels since March 16.

The International Energy Agency's member countries agreed on Wednesday to release 60 million barrels on top of the 180 million barrels the United States announced last week to help lower prices in a tight market after Russia's invasion of Ukraine.

However, analysts and traders said that even after the extraordinary release of oil supplies, supply remains tight.

State-owned refiners in China, the world's largest oil importer, are honouring existing contracts for Russian crude but avoiding new contracts despite significant discounts, responding to Beijing's call for caution.

National Australia Bank analyst Baden Moore said the latest release, plus the coordinated IEA release announced on March 1, equates to 1 million barrels a day of additional supply from May to the end of 2022, which would constrain prices in the short term.

Stalled indirect talks between Iran and the United States on reviving the 2015 deal on Tehran's nuclear program have further delayed the possibility of lifting sanctions on Iranian oil, keeping the market on edge.

Negotiators say political decisions in Tehran and Washington are needed to overcome the remaining challenges.