Oil futures suffered a third straight loss on Thursday, with global Brent crude prices briefly dipping under $100 a barrel for the first time in three weeks, a day after the announcement of a coordinated release of crude from strategic reserves by member countries of the International Energy Agency.
Natural-gas futures, meanwhile, marked their highest finish since December 2008, buoyed by tight supplies as a rise in coal prices lifted demand for the energy source.
West Texas Intermediate crude for May delivery
lost 20 cents, or 0.2%, to settle at $96.03 a barrel on the New York Mercantile Exchange after losing 5.6% on Wednesday. It marked its lowest finish since March 16, according to Dow Jones Market Data.
June Brent crude
the global benchmark, declined by 49 cents, or 0.5%, closing at $100.58 a barrel on ICE Futures Europe. The front-month contract touched a low of $98.41, the lowest intraday level since March 17.
fell 0.2% to $3.04 a gallon, while May heating oil
lost 2.3% at $3.268 a gallon.
May natural gas
rose 5.5% to $6.359 per million British thermal units, the highest front-month finish since December 2008.
The International Energy Agency, whose members include most major oil-consuming nations including the U.S., announced a coordinated release of 120 million barrels of crude, half of which would come from the U.S. as part of that country’s previously announced 180 million barrel release over the next six months.
So in addition to the U.S., IEA members will release of 60 million barrels, which is in “excess of the 30-50 [million barrels a day] that Biden previously suggested we could see from other countries,” said Warren Patterson, head of commodities strategy at ING, in a note. “These volumes are significant, although still fall short of the 2 [million barrels a day] of Russian losses that we estimate due to self-sanctioning.”
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Overall, analysts across the oil industry are torn over whether the coordinated release from global reserves will “sustain the oil market,” or if it will allow the Organization of the Petroleum Exporting Countries to further delay an output increase that would truly drive down prices long term, wrote analysts on StoneX’s energy team in Kansas City in a Thursday newsletter.
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Uncertainty surrounding energy demand has also been a focus for the market.
China’s omicron outbreak is spreading much faster than previous virus strains, and oil traders continue to downgrade their mainland demand forecasts, said Stephen Innes, managing partner at SPI Asset Management.
Meanwhile, it appears that for now, the European Union will not ban Russian oil imports, putting pressure on oil prices, and may focus on the “far easier task of cutting out less valuable coal instead, despite evidence of apparent war crimes committed by President Vladimir Putin’s forces in Ukraine,” said Innes.
A rise in coal prices has contributed to the recent rally in prices for natural gas, which competes with coal as a power source, analysts have said.
Read: Why U.S. natural gas climbed to its highest price in more than 13 years
The Group of Seven leaders said in a statement Thursday that they would “expedite our plan to reduce reliance on Russia for our energy, which include phasing out and banning Russian coal imports.” They also said they’ll accelerate their work to reduce their dependency on Russian oil.
Data from the Energy Information Administration on Thursday showed that domestic natural-gas supplies fell by 33 billion cubic feet for the week ended April 1. That compared with an average weekly decline of 27 billion forecast by analysts surveyed by S&P Global Commodity Insights, which said the EIA reported a climb of 19 billion for the same week a year ago.