OPEC production falls in March
Ithaca Energy acquires Cambo field
Brent and WTI crude oil futures remained stable on the day April 8 but were headed for a decline on the week amid the US and IEA countries announcing emergency stocks releases.
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Register NowAt 11:55 am BST, June ICE Brent crude futures were down 43 cents/b on the day at $100.15/b, while May NYMEX WTI futures fell 10 cents/b to $95.93/b.
Oil prices have been trending lower, and are at levels seen around six weeks ago following the agreed release of strategic reserves and continued lockdowns in Asia. The member countries of the International Energy Agency had agreed to a 120 million barrels oil reserve release April 6.
Market participants said that a prolonged lockdown in China's financial hub of Shanghai was also easing the wider oil complex. The megapolis with 25 million inhabitants makes up a substantial part of Chinese oil demand.
Shanghai reported over 21,000 new COVID-19 cases April 7 and the Chinese government's determination to stick with its zero-COVID policy is likely to lead to repeated lockdowns, which is bound to have an impact on oil demand, Carsten Fritsch, commodity analyst at Commerzbank said in a note.
Crude oil production by OPEC and its allies fell on the month for the first time in over a year in March, a survey by S&P Global Commodity Insights found, contributing to a tightening market made volatile by the Russia-Ukraine war.
OPEC's 13 members raised output by 60,000 b/d to 28.73 million b/d in March, but this was more than offset by a 160,000 b/d decline by the bloc's nine allies, who pumped 13.91 million b/d. With the net decline of 100,000 b/d, the widening gap between the OPEC+ production and quotas rose to a record-high 1.24 million b/d. This has cast further doubt on the group's ability to meet growing global oil demand, which many analysts expect to return to pre-pandemic levels in 2022.
The New Energy Strategy announced by the UK government April 7 has now got a boost. The use and development of the controversial Cambo oil field offshore Scotland will be likely reconsidered as its previous operator, Siccar Point Energy, was acquired by Ithaca Energy in a $1.5 billion deal.
"Cambo and Rosebank represent an opportunity for Ithaca to develop fields that will contribute significantly to the UK's energy security," Ithaca Energy said in a press release. It will reduce the need to import more carbon-intensive alternatives and "will increase the UK's energy independence through the energy transition," the company added.
The CBOE OVX index, an indicator of crude price volatility, was up on the day at 54.23%.
In the foreign exchange market, the euro was steady against the US dollar at $1.088.
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OIL FUTURES: Crude oil prices to decline on week amid stocks releases - S&P Global
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