Release the barrels !
The US finally announced the release of 50 mb of crude oil into the market, coordinated with Japan, South Korea, the UK and China. ICE Brent…
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Brent 1st-nearby declined on Friday, by 1.6% to $106.65/b while the NYMEX WTI went 1.7% down to end the week at $102.07/b. Prices are further down this morning, the Brent now trading below $103/b, mainly due to renewed worries about the pandemic in China (see the Daily Eco).
Oil benchmarks have slipped by an average 5% over the past week as demand concerns grew, with the lockdowns in China, the reduction of economic growth forecasts (we learnt on Friday that the German government would revise its forecast of German economic growth from 3.6% to 2.2%) and Fed’s president comments about a 50bp rate hike in May that could not only weigh negatively on US growth, but also make the USD stronger making USD-quoted commodities prices lower.
Fears of supply shortage remain as the European Union could announce a ban on import of Russian oil: in the wake of Germany, the Netherlands said on Friday the country will stop imports of Russian oil by the end of 2022.
US rig counts was up by 1 last week, according to Baker Hughes, reinforcing expectations that US oil output is going to increase at a slow pace.