Oil prices fell on Thursday for the third day in a row, with WTI trading as low as $94.5 per barrel. If the WTI price drops, further support can be found at the $90 per barrel level, while resistance can be found near $118.3 per barrel and further up at $130 per barrel.
The International Energy agencies have announced plans to release 120 million barrels from its emergency oil reserves, half of which will be released from U.S. stockpiles. The announcement has eased oil supply concerns, pushing oil prices down. The Biden administration has already vowed to release 1 million barrels of oil per day for the next six months from the U.S. Strategic Petroleum Reserve, totaling over 180 million barrels.
On Wednesday, the Energy Information Administration (EIA) announced an increase in crude oil inventories by 2.4 million barrels this week, indicating increased US output. The unexpected increase in supply has pushed oil prices down.
Oil prices are also under pressure by reports that a large wave of covid cases in China is forcing the country to enter lockdown once again. The zero-Covid plan in Shanghai has quarantined 26 million residents to their homes, raising fears of a generalized lockdown in China. China is the largest importer of crude oil and fears of a decrease in demand from lockdowns have sent oil prices plummeting.
On Wednesday, the Biden administration announced new sanctions on Russia, targeting Russia’s largest financial institutions to increase economic pressure on Russia. The US has banned all oil and gas imports from Russia, with as many as 3 million barrels per day of Russian crude oil potentially removed from the market as a result of sanctions and of boycotting of Russian oil.
A new round of sanctions on Russia was also agreed upon by EU member states on Thursday. According to European Commission President Ursula von der Leyen, EU sanctions will target the energy sector for the first time, with a ban on coal imports from Russia worth €4bn a year.
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