Oil prices got off seven-week lows on Monday. However, they remained under pressure following Japan stated it was weighing releasing oil reserves and as the coronavirus situation in Europe worsened, growing worries regarding both oversupply and low demand.
Brent missed 26 cents, or 0.3%, to $78.63 per barrel as of 0725 GMT, and U.S. West Texas Intermediate (WTI) crude futures were under 12 cents, or 0.2%, at $75.82 a barrel.
The market is in a state of flux as strategic petroleum reserves (SPR) releases are not entirely priced in yet, declared an oil trader in Singapore.
WTI and Brent prices hit their weakest after Oct. 1 earlier in the session. They fell about 3% on Friday, dipping for the fourth continuous week for the first time after March 2020.
Japanese Prime Minister Fumio Kishida indicated on Saturday he was ready to help fight soaring oil prices following a demand from the United States to release oil from its emergency stockpile, in an unprecedented move.
Tokyo is examining ways to bypass a law that permits the release of oil reserves only in a supply deficit or natural disaster.
On Friday, the White House pressed the OPEC producer group repeatedly to maintain adequate global supply, days following U.S. discussions with some of the world’s largest economies over possibly releasing oil from strategic reserves to quell high energy prices.
The joined SPR release could be 100 million to 120 million barrels or even higher, Citi analysts stated in a note dated Nov. 19. The bank calculated that this includes 45 million to 60 million barrels from the United States, about 30 million barrels from China, 5 million barrels from India, and 10 million barrels from Japan and South Korea.
COVID surge reimposes lockdowns
Further weighing on prices was plausible renewed lockdowns in Europe as coronavirus cases rose again. Germany informed on Friday it may need to move to a total lockdown, following Austria said it would reimpose strict measures to stop rising infections.
The trader stated that the worsening Europe coronavirus situation and profit-taking among investors towards year-end added to difficulties in the market.
Money managers trimmed their net long U.S. crude futures and options positions in the week to Nov. 16, the U.S. Commodity Futures Trading Commission stated on Friday.
Investors were also observing developments in the Middle East following Saudi state media reported early on Monday the Saudi-led coalition fighting the Iran-backed Houthi movement in Yemen said it discovered indications of impending danger to navigation and global trade south of the Red Sea.
