Oil prices turned lower today, Monday, with Brent crude back below $79, with prices under pressure due to the determination of many countries to free up oil reserves.
Japan said it is considering freeing up oil reserves, with the worsening “Covid-19” situation in Europe; This raised concerns about oversupply and weak demand.
Oil Prices Today
Brent crude futures prices – for January 2022 delivery – decreased by 0.7%, recording $78.30 a barrel.
The prices of West Texas Intermediate crude futures – January delivery – decreased by 0.7%, recording $75.39 a barrel.
Prices of West Texas Intermediate and Brent crude returned to their lowest levels since October 1, after rising earlier in the session, after falling by about 3% on Friday, falling for the fourth week in a row for the first time since March 2020.
Oil Market Conditions
An oil trader in Singapore said the market is in flux; The SPR issues have not yet been fully priced.
Last Saturday, Japanese Prime Minister Fumio Kishida hinted at his willingness to help combat high oil prices, following a request from the United States to release oil from emergency stockpiles, in an unprecedented move.
Tokyo is exploring ways to bypass a law that allows oil reserves to be released only in cases of supply shortages or natural disasters.
Pressure On OPEC
On Friday, the White House put pressure on the OPEC producer group again; To maintain adequate global supplies, days after the United States discussed with some of the world’s largest economies about the possibility of freeing oil from strategic reserves to quell rising energy prices.
Citi analysts said, in a note dated November 19, that the size of the combined SPR could range between 100 million and 120 million barrels or more from India and 10 million barrels each from Japan and South Korea.
Analysts noted that if it is issued during December and January, this could mean more resilient markets by about 1.5-2.0 million barrels per day, and this would be against the background of the expected withdrawal of 2.8 million barrels per day in December 2021 and 0. 5 million barrels per day in January.
Pressure has increased on oil prices with prospects of renewed lockdowns in Europe; COVID-19 cases are on the rise again.
Germany warned on Friday that it may need to move to a full lockdown after Austria said it would reimpose strict measures to tackle rising infections.
The trader said that the deterioration of the Corona situation in Europe and profit taking among investors by the end of the year increased the uncertainty in the market.
“Profit taking has turned into a pullback in prices,” he said, adding that prices are likely to drift until January before heading higher.
On Friday, the US Commodity Futures Trading Commission said money managers reduced their net US crude futures and options in the week ending November 16.
Investors are also watching developments in the Middle East after official Saudi media reported, in the early hours of Monday morning, that the Saudi-led coalition is fighting the Iran-backed Houthi group in Yemen, saying it had discovered indications of an imminent danger to global navigation and trade in southern Yemen. The Red Sea.
SOURCE : REUTERS