Oil prices cap worst week since 2020 amid reserves release
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E-mail Xinhua, April 2, 2022
Oil prices fell on Friday, capping their worst week in nearly two years, as supply concerns eased on reserves release.
The West Texas Intermediate (WTI) for May delivery lost 1.01 U.S. dollars, or 1 percent, to settle at 99.27 dollars a barrel on the New York Mercantile Exchange. Brent crude for June delivery decreased 32 cents, or 0.3 percent, to close at 104.39 dollars a barrel on the London ICE Futures Exchange.
For the week, the U.S. crude standard and Brent dropped 12.8 percent and 11.1 percent, respectively, based on the front-month contracts.
Both benchmarks saw their biggest weekly percentage declines since late April 2020, according to Dow Jones Market Data.
Members of the International Energy Agency (IEA) agreed to a new release of oil from emergency reserves.
"The details of the new emergency stock release will be made public early next week," the IEA said in a statement on Friday.
The move followed the largest-ever U.S. oil reserves release.
U.S. President Joe Biden announced on Thursday that an unprecedented 180 million barrels will be released from the country's strategic oil reserves between May and October.
"While tapping strategic reserves may help ease the supply shortage in the near term, we do not regard it as a long-term solution to the global energy crisis, and it will not fix the structural imbalances in the oil market," Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note.
The U.S. release over a six-month period may alleviate some current market tightness, it does not resolve the structural shortage resulting from years of underinvestment at a time of recovering global demand for oil, he said.
Meanwhile, some market participants think the size of the release could be constrained by logistical bottlenecks, such as limitations in pipeline capacity.
Traders also eyed a key decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+.
The oil alliance on Thursday decided to stick to its previously agreed plan to increase its May output by 430,000 barrels per day, despite calls for more production.
The decision "is a reminder that the group is challenged by dwindling capacity," said analysts at UBS.
"While we acknowledge near-term volatility and downside risk to near-term forecasts, we remain positive in our longer-term outlook for energy," they said.
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