Crude oil saw a sharp drop at the close on Wednesday amid a broader selloff across energy markets, which are still wary of a possible release of strategic oil reserves in the US, Australia’s ANZ Bank said in a Thursday note.
US President Joe Biden and Chinese President Xi Jinping discussed the merits of tapping strategic reserves during a virtual summit. Biden also called on the Federal Trade Commission to look into illegal conduct in US gasoline markets, the bank noted.
The US Energy Information Administration’s weekly report showed a large fall in inventories, which did little to stop the selling, ANZ Bank said. The bank believes this could be due to the bearish tone that the International Energy Agency and the Organization of the Petroleum Exporting Countries, or OPEC, took on in their own monthly oil market reports, in which both projected a surplus in the near future.
Meanwhile, European gas settled near a one-month high, with Dutch front-month gas futures briefly trading above 100 euros per megawatt-hour amid manic buying pushed by supply fears, according to ANZ Bank. Gas prices pared those gains late in the session amid a broader risk-off tone across markets, the bank said.
Concerns over tighter Russian supplies remain, with traders still on edge even as Russia reassured that the timing of eventual approval of the Nord Stream 2 pipeline will not be affected by the German energy regulator’s suspension of the pipeline’s certification process, ANZ Bank noted.
Gas shipments from Russia have recovered but are still well below year-ago levels, the bank said. The rally in Europe helped push up North Asian LNG prices, supported by strong buying from consumers, ANZ Bank said. Spot freight rates for LNG tankers in Asia rose to record highs amid strong demand.