Crude oil prices slipped in Asian trading on Monday morning leading to a second straight week decline after announcement of coordinated release of record volume and as Chinese COVID-19 infections continues to signal weaker demand.
The U.S. West Texas Intermediate crude fell by 2.26% to $96 a barrel while Brent dipped by 2.17% to $100 a barrel. Both these benchmarks has been at their most volatile level since June 2020.
Traders are closely anticipating to the developers in China as authorities kept Shanghai under complete lockdown. It is to be noted China is the world’s biggest oil importer.
Member nations of the International Energy Agency (IEA) will release 60 million barrels over the next six months, with the United States matching that amount as part of its 180 million barrel release announced in March.
The move was made to offset shortfall in Russian crude after the country was hit with heavy international sanctions amid its invasion in Ukraine.
“Oil is losing steam due to the joint efforts of the oil reserve release by U.S. and the IEA countries, along with weakening demand amid China extending lockdowns, where both of the manufacturing hubs, Shenyang and Shanghai, halted broad production,” CMC Markets analyst Tina Teng said as reported by Reuters.
The resale of 240 million barrels has aided in cooling down prices and sharply narrowed backwardation in oil price curves, where prices in prompt months are higher than those in future months.
President Joe Biden is set to virtually meet Indian Prime Minister Narendra Modi on Monday during a time when the White House has made it clear it does not want to see India importing Russian energy anymore.
In an attempt to help its allies to fill the void from cutback of Russian oil and gas – the United States last week added oil and natural gas rigs for a third week in a row.
