Oil prices fell on Friday, extending the previous day’s losses, on worries about potential oversupply after U.S. Energy Secretary Jennifer Granholm said refilling the country’s Strategic Petroleum Reserve (SPR) may take several years. Brent crude futures slid 48 cents, or 0.6%, to $75.43 a barrel by 0039 GMT, while U.S. West Texas Intermediate crude futures dropped 52 cents, or 0.7%, to $69.44 a barrel.
Both benchmarks were still on track for a weekly gain of about 3%-4%, recovering from their biggest weekly declines in months last week due to the banking sector crisis and worries about a possible recession. “There is a sell-off from the view that the United States will not refill oil reserve even if the WTI prices are at $67-$72 a barrel,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Granholm told lawmakers on Thursday that it will be difficult to take advantage of the low price this year. Sales directed by President Joe Biden last year pushed the stockpile to its lowest level since 1983.
The White House said in October it would buy back oil for the SPR when prices were at or below about $67-$72 per barrel. “Continued crude supply from Russia to global market also added to pressure,” Kikukawa said, predicting that the benchmarks would likely test their lows hit earlier this week also as there is lingering anxiety about the banking sector.
Deputy Prime Minister Alexander Novak said a previously announced cut of 500,000 barrels per day (bpd) in Russia’s oil production would be from an output level of 10.2 million bpd in February, the RIA Novosti news agency reported.That would mean Russia is aiming to produce 9.7 million bpd between March and June, when the production cut will be in force, according to Novak – a much smaller reduction in output than Moscow previously indicated.
On the supportive side, Goldman Sachs said commodities demand was surging in China, the world’s biggest oil importer, with oil demand topping 16 million bpd. The bank forecast Brent would reach $97 a barrel in the second quarter of 2024.