Adedapo Adesanya
By Adedapo Adesanya
The crude oil market settled lower on Friday as the United States said it would be difficult to refill the Strategic Petroleum Reserves (SPR) despite oil prices being in the desired range, adding downward pressure to oil prices and limiting the potential for a rebound.
Brent crude lost 92 cents or 1.2 per cent to trade at $74.99 per barrel, as the US West Texas Intermediate crude futures fell by 70 cents or 1 per cent to quote at $69.26 a barrel.
However, on a weekly basis, both benchmarks rose this week as the banking sector turmoil eased. Brent futures rose 2.8 per cent in the week, while US crude futures rose 3.8 per cent.
This is different from last week when both benchmarks posted their biggest declines in months as the markets were roiled by the collapse of two banks in the United States and the near-collapse of Credit Suisse, which was subsequently saved by a takeover by domestic rival UBS.
The White House said in October it would buy back oil for the SPR when prices were at or below about $67-$72 per barrel.
On Thursday, US energy secretary, Ms Jennifer Granholm, told lawmakers it would be difficult to take advantage of low prices this year to add to stockpiles, which are at their lowest level since 1983 following sales directed by President Joe Biden last year.
“This year, it will be difficult for us to take advantage of this low price,” she told US representatives in a congressional hearing. “But we will continue to look for that low price into the future because we intend to be able to save the taxpayer dollars.”
Biden administration officials have said they want to refill the reserve after last year’s historic sale of 180 million barrels when the oil price consistently is around $70 a barrel. Oil from that sale sold at about $94 per barrel.
Still, the Department of Energy (DOE) is moving forward with a sale of 26 million barrels from the SPR that was mandated by Congress in earlier years to help fund the federal budget. The oil will be delivered from April 1 to June 20.
Oil drew some support from strong demand expectations from China. Goldman Sachs said commodities demand was surging in the world’s biggest oil importer, with oil demand topping 16 million barrels per day.
Russian Deputy Prime Minister Alexander Novak said a previously announced cut of 500,000 barrels per day in Russia’s oil production would be from an output level of 10.2 million barrels per day in February.
This means Russia aims to produce 9.7 million barrels per day between March and June, according to Mr Novak, a much smaller output cut than Moscow previously indicated.
