Oil benchmarks on course for biggest weekly losses in 2 years

By Shadia Nasralla

LONDON (Reuters) – Oil dipped in and out of negative territory on Friday as members of the International Energy Agency (IEA) were due to discuss a further addition of oil reserves to the market alongside a planned 180 million barrel release by the United States.

The benchmark Brent and WTI contracts were both on course for their biggest weekly falls in two years, at 14% and 13% respectively.

Brent crude futures were down 63 cents, or 0.6%, at $104.08 a barrel by 1313 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 99 cents, or 1%, at $99.29.

On Thursday, U.S. President Joe Biden announced a release of 1 million barrels per day (bpd) of crude oil for six months from May, the largest release ever from the U.S. Strategic Petroleum Reserve (SPR).

Members of the IEA were scheduled to meet at 1200 GMT on Friday to discuss a further emergency oil release.

OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies including Russia, on Thursday stuck with plans for an increase of 432,000 bpd to their May output target despite Western pressure to add more.

“The looming flood of U.S. barrels does not change the fact that the market will struggle to find enough supply in the coming months,” PVM analyst Stephen Brennock said.

“The U.S. release pales in comparison to expectations that 3 million bpd of Russian oil will be shut in as sanctions bite and buyers spurn purchases.”

In a bearish signal for demand, China’s commercial hub of Shanghai ground to a halt on Friday after the government locked down most of the city’s 26 million residents, aiming to stop the spread of COVID-19.

JPMorgan said in a note it had kept its price forecasts unchanged at $114 a barrel for the second quarter and $101 a barrel in the second half of this year.

“Crucially, we recognize that a release of oil inventories is not a persistent source of supply, and if stranded Russian barrels average more than 1 million bpd next year, this will leave 2023 in a deep deficit, rendering our $98/bbl price forecast for the year too low,” the bank said.

(Additional reporting by Sonali Paul in Melbourne and Isabel Kua in Singapore; Editing by Jason Neely and Jan Harvey)