Oil Incurs Massive Weekly Loss As Biden Drawdown Increasingly Viewed As Futile

Meanwhile, the IEA can't decide on the parameters of their own emergency draw: File Image/Pixabay

U.S. president Joe Biden's latest planned release of emergency strategic reserves to combat high oil prices at the pump was said to have contributed on Friday to the commodity posting its biggest weekly loss in over 10 years, along with nations belonging to the International Energy Agency agreeing to release another round from stockpiles.

Member countries of the IEA did not agree on volumes or commitments  at an emergency meeting on Friday, but additional details could be revealed "within the next week or so, according  to Hidechika Koizumi, director of the international affairs division at Japan's Ministry of Economy, Trade and Industry.

Brent declined 32 cents at $104.39 per barrel, while West Texas Intermediate fell $1.01 at $99.27; both benchmarks for the week settled down around 13 percent.

The market was also under pressure Friday as WTI fell below its 50-day moving average for the first time since early January (Brent approached toward that level, but only briefly).

More bad news for traders came in the form of manufacturing activity in China in March reportedly taking a hit from the series of lockdowns imposed by governments to curb a resurgence of Covid-19.

While Biden's latest stockpile release is making headlines, analysts insist that like his previous releases, the amount of oil released compared to the amount lost to high demand and the Russia/Ukraine war is minuscule and doubtful to make any market impact.

Stephen Brennock, senior analyst at PVM, said, "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.

"The U.S. release pales in comparison to expectations that 3 million barrels per day [bpd] of Russian oil will be shut in as sanctions bite and buyers spurn purchases."

JP Morgan agreed, and on Friday stated in a note, "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 a barrel price forecast for the year too low."