On Monday, oil prices fell more than $2 a barrel for the second week in a row, owing to plans to release record volumes of petroleum and oil products from strategic storage, as well as ongoing coronavirus lockdowns in China.
By 0756 GMT, Brent crude for June delivery was down $2.12, or 2.1 percent, to $100.66 per barrel. The price of West Texas Intermediate crude in the United States fell $2.21, or 2.3 percent, to $96.05.
UBS, a Swiss financial firm, cut its Brent projection for June by $10 to $115 per barrel.
“The release of strategic government oil stocks over the next few months should relieve some market tightness, reducing the need for oil prices to rise to trigger near-term demand destruction,” said UBS analyst Giovanni Staunovo.
Over the following six months, member countries of the International Energy Agency (IEA) will release 60 million barrels, with the United States matching that amount as part of its 180 million barrel release announced in March. find out more
The efforts are intended to compensate for a deficit of Russian oil following the imposition of harsh sanctions on Moscow as a result of its invasion of Ukraine, which Moscow describes as a “special military operation.”
\ According to JP Morgan analysts, the release of Strategic Petroleum Reserve (SPR) volumes equals 1.3 million barrels per day (BPD) over the next six months, which is enough to cover a 1 million BPD shortfall in Russian oil supplies.
When asked if the EU was ready to discuss a Russian oil embargo, the bloc’s top diplomat indicated on Monday that more penalties against Russia were an option.
The market has also been watching developments in China, where authorities have imposed a “zero tolerance” policy for COVID-19 in Shanghai, a city of 26 million people. China is the world’s largest importer of oil.