NEW DELHI : Crude oil prices continued to fall on Monday on hopes of easing supplies after members of the International Energy Agency (IEA) last week agreed to release a total of 120 million barrels of oil from their emergency reserves.
Oil prices have largely been on the downside over the past fortnight and declined on Friday after IEA on Thursday said that there was unanimous agreement among member countries on 1 April for a second collective action this year in response to the significant strain in oil markets resulting from the Russia-Ukraine conflict. Last month, IEA members had agreed to release 62.7 million barrels.
Brent futures fell below $100 per barrel on Monday. At the time of writing this article, the June contract of Brent on the Intercontinental Exchange was trading at $99.12 per barrel, lower by 3.56% from its previous close.
The May contract of West Texas Intermediate on the NYMEX fell 3.85% to $94.48 per barrel.
The commitments submitted by IEA members reached 120 million barrels to be released over a six-month period. The US will contribute about 60 million barrels, which is part of the larger drawdown from its Strategic Petroleum Reserve that was announced on 31 March.
Following the announcement by IEA, India said that it is looking at ways to support the agency’s move to release oil from its emergency reserve.
The Union ministry of petroleum and natural gas on Thursday had said that the government of India welcomes the announcement by IEA for collective oil stock release of as much as 120 million barrels.
The total capacity in the established Strategic Petroleum Reserve facilities of 5.33 million metric tonnes is estimated to provide for about 9.5 days of crude oil requirement, according to the consumption pattern of 2019-20.
The rise in covid-19 cases in China and the lockdown in the key city of Shanghai have also dampened sentiments in the market.
“On Monday crude was trading in the negative after hefty release of strategic reserves by many countries and as the lockdown in China continued," said Rahul Kalantri, vice-president, commodities, Mehta Equities Ltd.
“Overall, concerns of supply from Russia continue because of the ongoing war with Ukraine and the strict sanctions that have been imposed by western countries," Kalantri said.
Oil marketing companies have kept retail prices of transport fuels unchanged for the past five days after raising them by around ₹10 per litre in a graded manner since 22 March, though the global oil markets remain volatile.
In Delhi, the retail price of petrol is ₹105.41 per litre while that of diesel is ₹96.67 a litre, following the last hike in prices on 6 April, when they were raised by of 80 paise per litre.
