Oil inches up on supply concerns despite stock release, Yemen ceasefire

 Oil inches up on supply concerns despite stock release, Yemen ceasefire.

Oil prices rose higher on Monday as concerns over tight supply continued, even as investors released supplies from strategic reserves from consuming countries and a conflict in Yemen raised hopes that supplies in the Middle East issues may be reduced.

Brent crude futures were up 9 cents, or 0.09%, at $104.48 a barrel by 0427 GMT while US West Texas Intermediate crude was up $99.30 a barrel, up 3 cents, or 0.03%. Both contracts slipped $1 when the market opened on Monday.

The United Nations has signed a two-month deal between the Saudi-led coalition and the Houthi group allied with Iran for the first time in seven years of conflict. Saudi oil facilities have been attacked by the Houthis during the conflict, disrupting supplies from Russia.

"Nevertheless, the fragile detent does little to alleviate the absence of Russian oil," Stephen Innes, managing partner at SPI Asset Management, said in a note.

Industry sources said oil and gas condensate production in the world's No. 2 exporter fell to 11.01 million barrels per day (bpd) in March, from an average of 11.08 million bpd in February. The Russian oil industry has been hit by Western sanctions and buyer protests following Russia's invasion of Ukraine. Estimates of Russian oil supply losses range from 1 million to 3 million bpd.

Oil prices fell nearly 13% last week after US President Joe Biden announced that up to 1 million bpd of oil would be sold from the US Strategic Petroleum Reserve (SPR) for six months starting in May. Biden said the third release, in the past six months, would act as a bridge until domestic manufacturers could ramp up production and balance supply with demand.

The US Department of Energy formally outlined the sale of oil from emergency reserves, while members of the International Energy Agency also agreed on Friday to release more oil. The IEA said the volume would be made public this week.

"The combined efforts of the US and its partners may temporarily balance the supply shortfall in 2022, but it may not be a long-term solution," Tina Teng, market analyst at CMC Markets APAC & Canada, said in a note.

"Furthermore, US oil producers may be reluctant to increase production to keep profits high."

Despite Biden's calls for US energy firms to ramp up production, growth in the rig count remains slow as drillers continue to return cash to shareholders from higher crude oil prices rather than boost production. Demand concerns in China, the world's top oil importer, remain as its most populous city, Shanghai, has extended the COVID-19 lockdown.

China's transport ministry expects a 20% drop in road traffic and a 55% drop in flights during the three-day Qingming holiday that begins on Sunday due to a surge in COVID-19 cases in the country.

Source by internet.

Created by MOHAMMAD SHOAIB.