EUROPEAN COMMODITY UPDATE: Crude rattled by expected “massive” reserve release

Analysis details (09:40)

WTI and Brent remain firmly on the backfoot in the wake of reports suggesting that the Biden administration is considering a 'massive' release of oil to combat inflation and may release up to 1mln bpd for months from the strategic reserve in which the total release could be 180mln bbls. The news has sent May’22 WTI and Jun’22 Brent to respective lows of USD 100.53/bbl and USD 107.39/bbl to leave them a few dollars above their weekly lows of USD 98.44/bbl and USD 102.19/bbl respectively. In terms of desk reactions to the report, Goldman Sachs suggests that a potentially large SPR release would ease the situation but wouldn't resolve the structural deficit in the oil market. GS adds that adjustments for the SPR release and Iran supply delays would lower its H2 22 Brent forecast by USD 15, to USD 120/bbl - still above market forwards. Elsewhere in the energy space, Russian press reports suggest that Gazprom is studying options of halting gas supplies to Europe amid issues of payments in RUB. Also of note for the Russian energy sector, separate reports suggest the nation is offering oil to India at a discount of around USD 35/bbl. Today is also “OPEC+ day”, however, the announcement from the group is widely expected to be a non-event with officials set to confirm plans for a 400k BPD production boost in May. In the metals space, spot gold is contained well within recent ranges whilst copper remains subdued following disappointing Chinese PMI metrics overnight. Finally, Reuters notes that Dalian iron ore saw its best quarterly performance for five quarters amid Chinese policy support.

31 Mar 2022 - 09:38- EnergyData- Source: Newsquawk