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Oil eases on pandemic worries, strong U.S. dollar

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© Reuters. FILE PHOTO: Storage tanks are seen at the Petroineos Ineos petrol refinery in Lavera, France, March 29, 2022. REUTERS/Benoit Tessier

By Scott DiSavino

NEW YORK (Reuters) – Oil prices steadied in volatile trade on Tuesday as growing worries about coronavirus demand destruction offset supply concerns after the United States and Europe planned to impose new sanction on Russia for alleged war crimes in Ukraine.

Brent futures fell 47 cents, or 0.4%, to $107.06 a barrel by 11:31 a.m. EDT (1531 GMT). U.S. West Texas Intermediate (WTI) crude fell 31 cents, or 0.3%, to $102.97.

Chinese authorities extended a lockdown in Shanghai to cover all of the financial center’s 26 million people, despite growing anger over quarantine rules in the city.

Mizuho executive director of energy futures Robert Yawger said oil traders were also worried about a report from the Johns Hopkins Coronavirus Resource Center that new U.S. deaths from COVID-19 rose on Monday to what he said was an all-time high of 14,562, which would push total U.S. deaths over 1 million since the start of the pandemic.

Officials at Johns Hopkins were not immediately available for comment. Yawger said the prior U.S. daily record for deaths was 4,442.

The West is planning new sanctions against Russia over civilian killings in Ukraine. President Joe Biden’s national security adviser said new U.S. sanctions would be announced this week.

The European Union also proposed sweeping new sanctions against Russia, including a ban on coal imports.

German Foreign Minister Annalena Baerbock said the ban on coal will be followed by oil and then gas.

Moscow, meanwhile, said Western allegations Russian forces committed war crimes by executing civilians in the Ukrainian town of Bucha were a “monstrous forgery” aimed at denigrating the Russian army.

Britain urged Group of Seven (G7) and North Atlantic Treaty Organization (NATO) nations to ban Russian ships from their ports, and agree to a timetable to phase out oil and gas imports from Russia.

To calm oil prices, U.S.-allied countries agreed last week to a coordinated oil release from strategic reserves for the second time in a month.

Prices rose earlier on Tuesday after sources told Reuters International Energy Agency (IEA) member states were still discussing how much oil they would release.

Supply concerns in several Organization of the Petroleum Exporting Countries and their allies (OPEC+), also supported prices.

Iraq pumped 4.15 million barrels per day (bpd) of oil in March, 222,000 bpd short of its production quota under an agreement with other OPEC+ producers.

OPEC+ member Russia’s daily oil and gas condensate production in early April has declined by 4% from March.

Kazakhstan, another OPEC+ producer, cut its oil output forecast to 85.7 million tonnes this year from the previous target of 87.5 million after damage to the Caspian Pipeline Consortium terminal in Russia.

Oil prices could gain some support later Tuesday if analysts forecast are correct and U.S. crude inventories declined by 3.0 million barrels last week. [EIA/S] [API/S]

The American Petroleum Institute (API), an industry group, will issue its inventory report at 4:30 p.m. EDT (2030 GMT) on Tuesday, while the U.S. Energy Information Administration (EIA) will report at 10:30 a.m. EDT (1430 GMT) on Wednesday.

Oil dips as coronavirus worries offset more Russia sanctions

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