Crude oil futures traded lower on Friday after the International Energy Agency (IEA) agreed to take all necessary steps to complete the remaining release of around 100 million barrels of oil.
At 9.34 am on Friday, December Brent oil futures were at $105.22, down by 0.66 per cent, and November crude oil futures on WTI (West Texas Intermediate) were at $97.21, down by 0.78 per cent. October crude oil futures were trading at ₹9,198 on Multi Commodity Exchange (MCX) during the initial hour of trading on Friday against the previous close of ₹9,285, down by 0.94 per cent, and November futures were trading at ₹9,096 against the previous close of ₹9,177, down by 0.88 per cent.
The Governing Board of IEA acknowledged that approximately 330 million barrels of oil have so far been released, and it agreed to take all necessary steps to complete the remaining releases of around 100 million barrels in a timely manner consistent with national circumstances.
It agreed to accelerate the release of the remaining volumes, with specific plans already in place, including over 20 million barrels of diesel as soon as possible.
IEA encouraged those members holding oil production and refining capacities to boost supply of crude and refined products, particularly diesel. It also underlined the importance of the free flow of energy trade.
In their Commodities Feed for Friday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said oil remains well-supported. A pattern has set in: prices slide early in the session, then claw back most of those losses by the close. As a result, ICE Brent continues to comfortably trade above $100 a barrel. Uncertainty in West Asia and concerns over the sustainability of oil flows through the Strait of Hormuz has the market pricing in a significant risk premium. The longer this pickup in flows continues, the more likely the market will start giving back some of this risk premium, they said.
In order to see a full removal, there needs to be some kind of agreement between the US and Iran. This would provide the market with more confidence that stronger oil flows from the region will continue, they added.
Meanwhile, petroleum status report released by the US EIA (Energy Information Administration) showed a sharp decline in the inventories for the week ending October 8.
According to US EIA, commercial crude oil inventories decreased by 8.6 million barrels to 415.6 million barrels, 3 per cent below the five-year average, for the week ending October 8.
Gasoline inventories increased 3.5 million barrels, 4 per cent below the five-year average. Distillate inventories decreased 2.5 million barrels, 12 per cent below the five-year average.
Over the past four weeks, total products supplied in the US averaged 21.1 million barrels a day, up 2 per cent year over year. The four-week average for gasoline product supplied decreased 0.4 per cent year over year to 8.7 million barrels a day, while the four-week average for distillate product supplied decreased 0.2 per cent to 4 million barrels a day. The four-week average for jet fuel product supplied increased 2.3 per cent year over year.