Oil prices drop amid concerns of oversupply as US Energy Secretary Jennifer Granholm suggests that refilling the Strategic Petroleum Reserve may take years, leading to a sell-off.
Brent crude futures fell 0.6% to $75.43 a barrel, while U.S. West Texas Intermediate crude futures dropped 0.7% to $69.44 a barrel.
The decline comes despite both benchmarks heading for a weekly gain of 3-4% after last week’s banking sector crisis and fears of a possible recession. The White House previously stated its intention to buy back oil for the SPR at or below $67-$72 per barrel.
“Continued crude supply from Russia to global market also added to pressure,” Kikukawa said, Hiroyuki Kikukawa, general manager of research at Nissan Securities, predicting that the benchmarks would likely test their lows hit earlier this week also as there is lingering anxiety about the banking sector, according to Reuters.
Deputy Prime Minister Alexander Novak said a previously announced cut of 500,000 barrels per day (bpd) in Russia’s oil production would be from an output level of 10.2 million bpd in February, the RIA Novosti news agency reported.
That would mean Russia is aiming to produce 9.7 million bpd between March and June, when the production cut will be in force, according to Novak – a much smaller reduction in output than Moscow previously indicated.
On the supportive side, Goldman Sachs said commodities demand was surging in China, the world’s biggest oil importer, with oil demand topping 16 million bpd. The bank forecasted Brent would reach $97 a barrel in the second quarter of 2024.
