Oil prices retreat amid demand and supply pressures

A worker takes a sample of crude oil from an oil well operated by the Venezuelan state oil company PDVSA in Morichal, Venezuela, July 28, 2011. REUTERS / Carlos Garcia Rawlins

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  • Japan has announced it could release oil reserves
  • Europe battles fourth wave of coronavirus infections
  • US dollar trades near 16-month high

LONDON, Nov. 22 (Reuters) – Oil prices fell on Monday as rising COVID-19 cases in Europe and a potential release of Japanese oil reserves raised concerns about both oversupply and weak demand.

Brent crude fell 56 cents, or 0.7%, to $ 78.33 a barrel at 1157 GMT and U.S. West Texas Intermediate (WTI) crude fell 54 cents, or 0.7%, to 75. $ 40.

The prospect of nationwide lockdowns in Europe has raised concerns about growing economic and oil demand, said Tamas Varga, oil analyst at London-based brokerage firm PVM Oil Associates.

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Investors sought safe havens such as the dollar early in the session, contributing to the sharp decline in oil prices, Varga added.

Tens of thousands of people, many of them far-right supporters, demonstrated in Vienna on Saturday after the Austrian government announced a new lockdown. Germany could also impose new restrictions, with politicians debating a lockdown for unvaccinated people. Read more

The US dollar traded near a 16-month high against the euro on Monday, making dollar-denominated crude more expensive for buyers of other currencies. Read more

Meanwhile, the prospect of oil being released from Strategic Petroleum Reserves (SPRs) kept pressure on oil prices and kept Brent below the psychologically important $ 80 mark.

Japanese Prime Minister Fumio Kishida said on Saturday that he was ready to help with efforts to tackle soaring oil prices after a demand by the United States to release oil from its emergency stockpile. Read more

“Gasoline prices are close to $ 4 a gallon and that’s when American politicians get very nervous,” said Fereidun Fesharaki, president of consulting firm Facts Global Energy.

But any release from SPR will only have a brief impact for two or three weeks before everything is back to normal, he added.

The combined release of SPR could be 100 to 120 million barrels or even more, Citi analysts said in a note dated Nov. 19. That includes 45-60 million barrels from the United States, about 30 million barrels from China, 5 million barrels. from India and 10 million barrels each from Japan and South Korea, the bank estimated.

Rising production in Libya also put pressure on prices. The Libyan National Oil Company (NOC) on Monday gave the green light to production from the Al-Khair oil field near Sirte, President Mustafa Sonallah said on a live broadcast.

Investors were also monitoring developments in the Middle East after Saudi state media reported on Monday that the Saudi-led coalition fighting the Iran-backed Houthi movement in Yemen said it detected indications of a imminent danger to navigation and world trade south of the Red Sea. . Read more

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The 6-month offset structure for Brent and WTI – where immediate delivery contracts are more expensive than those for later periods – shrinks sharply, indicating a reduction in market tension in the short term

Reporting by Bozorgmehr Sharafedin in London Additional reporting by Sonali Paul, Naveen Thukral and Florence Tan in Singapore, Aaron Sheldrick in Tokyo Editing by David Goodman

Our Standards: Thomson Reuters Trust Principles.

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