Abundant Stocks, World Crude Oil Prices are Sinking

Jakarta, Reportase – World crude oil prices weakened in afternoon trading today amid concerns about potential oversupply.

The reason for the concern comes after US Secretary of Energy Jennifer Granholm said replenishing the country’s Strategic Petroleum Reserve (SPR) may take several years.

Quoting data Refinitiv In trading on Friday (24/3/2023) at 12.55 WIB the Brent benchmark crude oil price for the May delivery contract was recorded at US$75.81 per barrel, down 0.13% from yesterday’s position.

Meanwhile, West Texas Intermediate or WTI crude oil fell 0.17% to US$69.83 per barrel.

Even though today is weak, the weekly performance of crude oil is positive, namely strengthening 3.84% to 4.7%. This performance rose from a decline of 12% last week.

“There is a sell-off of the view that the United States will not replenish oil reserves even if WTI prices are at US$67-US$72 a barrel,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

The White House said in October it would buy back oil for SPR when prices were at or below around $67-$72 a barrel.

Granholm told lawmakers it would be hard to take advantage of this year’s low prices to add to stockpiles, which are currently at their lowest level since 1983 following President Joe Biden’s directed sales last year.

Kikukawa of Nissan Securities said Russia’s continued supply of crude to global markets was also weighing on oil along with concerns about the banking sector.

Russian Deputy Prime Minister Alexander Novak said a previously announced cut of 500,000 barrels per day (bpd) in Russian oil production would come from production levels of 10.2 million bpd in February, according to a report by the RIA Novosti news agency.

That means Russia is aiming to produce 9.7 million bpd between March and June when production cuts will take effect, according to Novak.

However, the decline in oil prices was limited by expectations of strong demand from China, the world’s largest oil importer, with oil demand reaching 16 million barrels per day.

Goldman Sachs expects the benchmark Brent oil price to reach US$97 per barrel in the second quarter of 2024.

CNBC INDONESIA RESEARCH

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