Price Performance Indicators

• In a week (28/3 - 1/4) the price of ICDX’s crude oil edged down almost 4 percent.   
• The highest volatility reached 7.27 percent. 

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Market Review

The movement of oil prices in a week was dimming, overshadowed by the threat of excess supply after the US announced (30/3) that it would release oil from strategic reserves in fantastic amounts, which amounted to 180 million barrels or equivalent to 2 days of world crude oil demand, which will later be released by 1 million barrels daily for the next 6 months. In early March, the US together with its allies, namely member countries of the International Energy Agency (IEA) announced they will release more than 60 million barrels of oil reserves, with 30 million barrels coming from US oil reserves.

From the demand side, the situation in China is also in the spotlight. The world's first-largest crude oil importer is experiencing a resurgence in Covid-19 cases, which has forced a return to lockdown, including Shanghai, China's financial hub, which has been under lockdown since March 28. Shanghai alone accounts for about 4% of China's total oil consumption.

Meanwhile, the conflict in Ukraine is still not over, making more and more economic sanctions imposed by western countries and their allies against Russia. As a result, Russia released a decree (30/3) demanding that payments for natural gas be made in rubles. This certainly triggers the threat of disruption of energy supply in the European market because the European Union relies on Russia for around 45% of its natural gas supply and 25% of its oil imports.

Market View

Following US, IEA Increases Amount of Oil Released

The members of the International Energy Agency (IEA), which are US allies, plan to increase the amount of oil that will be released from their emergency reserves to 60 million barrels (6/4). Therefore, the oil to be released in a coordinated manner will amount to 120 million barrels - half from the US and a half from the IEA. The US will independently release an additional 120 million barrels beyond the quota to be released in coordination with the IEA, bringing the total oil released jointly by the US and the IEA to 240 million barrels. At the same time, the IEA is also lobbying its partner countries to participate in the coordinated release, to which Japan and South Korea have made commitments so far. India, which is an IEA partner country and the world's third-largest oil importer, said it was considering the IEA's invitation, but had not officially said it would participate in the IEA's plan.

OPEC+ Increases Production of May to 432,000bpd

At its regular monthly meeting (31/3), OPEC and its allies agreed to increase May production to 432,000 bpd, up slightly from the previous monthly increase of 400,000 bpd. OPEC+ also reiterated not to pump more oil at the insistence of the US. In addition, the IEA was also excluded from the OPEC+ reference data source, which also indicated OPEC+'s support for Russia. The May production quota excludes Iran, Libya, and Venezuela due to production disruptions being experienced by the OPEC member countries. This makes market participants monitor the continuation of Iran's nuclear negotiations because it has the potential to affect the amount of OPEC+ supply to the market.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Source: ICDX Research