Oil prices rise but forecast 3% weekly drop as stocks are released

A maze of crude oil pipes and valves are pictured during a Department of Energy visit to the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson/

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MELBOURNE/BEIJING, April 8 (Reuters) – Oil prices rose on Friday but were expected to fall around 3% for the week as consumer countries’ planned release of 240 million barrels from emergency stocks offset some concerns regarding the reduction of supplies from Russia due to western sanctions.

Brent crude futures were up 16 cents, or 0.2%, at $100.77 a barrel at 0736 GMT. U.S. West Texas Intermediate (WTI) crude futures gained 35 cents, or 4%, to $96.37 a barrel.

Both contracts are set to fall for a second week, with Brent expected to drop 3.4% while WTI is expected to drop 2.8%.

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Analysts said the emergency release of oil, amounting to around 1 million barrels per day (bpd) from May to the end of the year, could limit price increases in the short term, but would not cover not entirely the volumes lost if more countries impose sanctions on Russia. about its invasion of Ukraine, which Moscow calls a “special operation”. Read more

International Energy Agency member nations will release a combined 60 million barrels over the next six months, with the United States matching that amount as part of its 180 million barrel release announced in March.

“While this is the biggest release since the stock was created in 1980, it will fail to change the fundamentals of the oil market. It will likely delay further increases in production from major producers, the analysts said. ANZ Research analysts in a note.

The release could deter producers, including the Organization of the Petroleum Exporting Countries (OPEC) and U.S. shale producers, from accelerating production increases even with oil prices around $100 a barrel, it said. they stated.

Investors are also assessing oil market fundamentals amid uncertainty over slowing demand in China, where cities have been in lockdown due to the latest wave of coronavirus infections and loss of supply from from Russia.

“Only time can give a clear answer,” analysts at Haitong Futures said.

A Chinese state-backed CNPC-affiliated think tank lowered its view of China’s second-quarter oil demand by 180,000 bpd from its previous estimate due to lockdowns there. Read more

At the same time, the European Union’s consideration of a ban on Russian oil, following its plan to embargo Russian coal, will limit any drop in oil prices in the short term.

“In the court of public opinion, the pressure is mounting on Brussels to act, and if that pressure valve bursts and the EU sanctions Russian oil, we could see Brent crude at $120 in the blink of an eye. eye,” said Stephen Innes, managing director of SPI Asset Management. , said in a note.

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Reporting by Sonali Paul in Melbourne and Muyu Xu in Beijing Editing by Shri Navaratnam, Simon Cameron-Moore and Christian Schmollinger

Our standards: The Thomson Reuters Trust Principles.

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