Oil oscillates with IEA crude reserve release plan in focus
BNN Bloomberg
Oil swung between gains and losses as traders assessed prospects for further crude releases from strategic reserves, the outlook for tighter U.S. monetary policy and weaker demand from top consumer China as it grapples with fresh virus outbreaks.
Oil swung between gains and losses as traders assessed prospects for further crude releases from strategic reserves, the outlook for tighter U.S. monetary policy and weaker demand from top consumer China as it grapples with fresh virus outbreaks.
West Texas Intermediate gained past US$98 a barrel after slumping by more than US$5 on Wednesday following the International Energy Agency’s announcement that U.S. allies will deploy 60 million barrels from stockpiles. That’s on top of the 180 million-barrel release already announced by U.S. President Joe Biden.
Oil has been wracked by intense volatility over the past six weeks as Russia’s invasion of Ukraine roiled commodity markets. In response to the war, Washington and its allies have been trying to punish Moscow economically, while also moving to stem the rise in energy prices that’s fanning already-elevated inflation. Japan on Thursday said it would release 15 million barrels of crude reserves, as part of a coordinated effort between the U.S. and its allies to hold down rising costs.
“Following the strong oil-price drop on Wednesday, the fundamentals still show a tight market and demand still holding up,” said Giovanni Staunovo, a commodity analyst at UBS Group AG’s global wealth management unit. “There’s also still prevailing concern on Russian supply, although flows remain supported for now.”
Oil traders were also assessing the consequences of a hawkish pivot from the Federal Reserve, as policy makers rein in the support they deployed to cushion the impact of the pandemic. In addition to rate rises, the Fed signaled it will reduce its bond holdings at a maximum pace of US$95 billion a month.
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