Oil swung between gains and losses to trade near $100, with an ongoing supply deficit due to the war in Ukraine weighed against efforts by consumers to tame prices.
West Texas Intermediate was trading up 0.1%, switching between gains and losses. Vitol Group, the world’s biggest independent oil trader, said at the weekend that oil prices could be higher given the risk of supply disruption from Russia, but that the market is still trying to establish exactly how many barrels have been lost. The European Union on Monday condemned Russia for atrocities by its military in several Ukrainian towns, saying it will work on additional sanctions against Moscow.
Last week, prices suffered their biggest weekly decline in two years after the U.S. announced a giant release of oil from its strategic petroleum reserve. Allies within the International Energy Agency will also tap stockpiles, with details expected this week. After the U.S. move, the structure of the futures curve has weakened, indicating traders think supply could be less tight.
“We think that tapping the strategic reserves will provide some near-term relief, but not resolve the long-term structural imbalance,” said Mark Haefele, Chief Investment Officer of UBS Global Wealth Management. “We still think oil prices are well-supported.”
At the same time, China is this week grappling with a renewed coronavirus outbreak that’s hurting oil consumption. Shanghai’s 25 million residents are almost all under some form of lockdown as the country added more than 13,000 daily infections, with state media reporting a case infected with a new subtype.
- West Texas Intermediate for May delivery edged higher to $99.34 a barrel at 10:27 a.m. in London.
- Brent for June settlement lost 0.2% to $104.23.
Meanwhile Iran said that it’s close to reaching an agreement with the U.S. amid stop-start talks to revive the nuclear accord between the two countries. If concluded, a pact may boost official Iranian crude exports.