
Apr 11, 2022 04:15AM ET
By: AnalysisWatch
Oil prices fell more than $2 a barrel on Monday after a second straight weekly decline on news of plans to release record amounts of crude and petroleum products from strategic stockpiles and the continued suspension of a coronavirus outbreak in China.
The price of Brent crude for June delivery fell $2.12, or 2.1%, to $100.66 a barrel at 03:56 AM ET. U.S. West Texas Intermediate crude lost $2.21, or 2.3%, to $96.05.
Swiss investment bank UBS cut its June estimate for Brent crude by USD 10, to USD 115 per barrel.
The release of the Strategic Petroleum Reserve should alleviate some of the market tightening in the coming months and reduce the need for oil price increases as a trigger for short-term demand destruction, UBS analyst Giovanni Staunovo said.
International Energy Agency (IEA) member countries will release 60 million barrels over the next six months, with the United States also releasing 60 million barrels as part of its 180 million barrel release announced in March.
These measures are aimed at replacing the shortage of Russian oil after Moscow was hit with tough sanctions over its invasion of Ukraine, which it described as a "special military operation."
According to analysts at JP Morgan, the release of volume from the Strategic Petroleum Reserve (SPR) is equivalent to 1.3 million barrels per day (bpd) over the next six months and is enough to offset a shortfall in Russian oil supplies of 1 million bpd.
Asked on Monday whether the EU was prepared to consider a Russian oil embargo, the European Union's top diplomat said further sanctions against Russia were an option.
The market was also watching developments in China, where authorities have shut down the 26 million bpd Shanghai plant as part of their "zero tolerance" policy towards COVID-19. China is the world's largest oil importer.
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