Get 40% Off
🚀 Our AI Picked 6 Stocks that Jumped +25% in Q1. Which Picks Will Soar in Q2?Unlock full list

Oil Up, but Global Supply and Demand Concerns Linger

Published 04/04/2022, 01:49 AM
Updated 04/04/2022, 01:52 AM
© Reuters.

By Gina Lee – Oil was up on Monday morning in Asia. Investors are monitoring the release of supplies from strategic reserves from consuming nations, while a truce in the Middle East could ease supply concerns.

Brent oil futures was up 0.29% to $104.69 by 12:59 AM ET (4:59 AM GMT) and WTI futures edged up 0.12% to $99.39. Both Brent and WTI futures fell $1 when markets opened on Monday.

The United Nations helped broker a two-month truce between a Saudi Arabia-led coalition and the Houthi group aligned with Iran, the first in the seven-year conflict. Saudi oil facilities had recently come under attack by the Houthis during the conflict, adding to supply disruption from Russia.

"This was a threat to replenish, and a ceasefire would reduce that threat to supply," Price Futures Group analyst Phil Flynn told Reuters.

Saudi oil and gas condensate production fell to 11.01 million barrels per day (bpd) in March, from an average output of 11.08 million bpd in February, according to industry sources. Western sanctions that followed Russia's invasion of Ukraine on Feb. 24. have also hit Russian oil refining and exports. Estimates of the Russian oil supply loss range from one to three million bpd.

Oil prices tumbled about 13% during the previous week after the U.S. announced a plan to sell up to 1 million bpd of oil from the U.S. Strategic Petroleum Reserve (SPR) for six months starting in May 2022. The U.S. Energy Department on Friday released a formal outline for the sale, while members of the International Energy Agency also agreed to release more oil on Friday.

"The joint efforts of the US and its allies could temporarily balance off the supply shortfalls in 2022, but it might not be a long-term solution," CMC Markets APAC & Canada markets analyst Tina Teng said in a note.

"Also, the U.S. oil producers may be reluctant for an output increase to keep profit high."

Meanwhile, Shanghai extended a lockdown to curb the COVID-19 outbreak in the city, and fuel demand concerns in the world’s top oil importer persist. China's Ministry of Transport expects a 20% fall in road traffic and a 55% drop in flights during the three-day Qingming holiday.

Latest comments

Bring back US independence to foreign oil... What's wrong with this administration?
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.