Crude oil markets started the week weak after the second consecutive weekly decline, pressured by China’s lockdowns and weighted by a surge in the surplus following announced plans to release record volumes of crude oil and oil products from strategic stockpiles.
As crude oil benchmark futures go through wild swings for several weeks, the most since June 2020, global oil markets fell for the second week in a row.
Early Monday, the benchmark Brent oil fell more than $2 to $100.40 a barrel and U.S. crude fell more than 2.5 percent to $95.82. Last week, Brent was down 1.5 percent and the US West Texas Intermediate 1 percent.
The world’s largest importer has limited the lure of the oil market; China is battling a resurgence in COVID-19 cases, with authorities keeping Shanghai, a city of 26 million, locked under its “zero tolerance” for COVID-19.
In addition, International Energy Agency (IEA) member countries have agreed to release 60 million barrels on top of a 180 million barrel release announced by the US last week to help squeeze prices in a tight market following Russia’s invasion of Ukraine, with the US matching that amount as part of the 180 million barrels release announced in March.
“During early Asian trade, crude oil is trading negatively at 2 percent following the massive release of strategic reserves by many countries and as China’s lockdowns continue. Ukraine and severe sanctions imposed by Western countries,” said Rahul Kalantri, Vice President for Commodities at Mehta Equities.
Indeed, since Russia invaded Ukraine on Feb. 24, global crude oil prices have soared, with international benchmark Brent futures hitting a multi-decade high of nearly $140 a barrel last month.
While crude oil costs have fallen from those highs, with benchmark futures contracts falling for the second week in a row, international oil prices have remained above $100 a barrel since Moscow attacked Ukraine.