Oil prices inched up on Friday but were set to fall around 3% for the week after consuming countries agreed to release 240 million barrels of oil from emergency stocks to help offset disrupted Russian supply.
Brent crude futures rose 13 cents, or 0.1% to $100.71 a barrel at 0139 GMT, while U.S. West Texas Intermediate (WTI) crude futures advanced 35 cents, or 0.4%, to $96.38 a barrel.
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Analysts said the emergency oil release, amounting to about 1 million barrels per day from May to the end of the year, might cap price rises in the short term, but would not fully cover volumes lost from Russia due to sanctions for its invasion of Ukraine, which Moscow calls a “special operation”.
“Although this is the biggest release since the stockpile was created in 1980, it will fail to ultimately change the fundamentals in the oil market. It is likely to delay further increases in output from key producers,” ANZ Research analysts said in a note.
The release may deter producers, including the Organization of the Petroleum Exporting Countries (OPEC) and U.S. shale producers, from accelerating output increases even with oil prices around $100 a barrel, they said.
At the same time, the European Union`s consideration of a ban on Russian oil, following its plan to embargo Russian coal, will limit any drop in oil prices in the near term.
“In the court of public opinion, pressure is mounting on Brussels to act, and if that pressure valve pops and the EU sanctions Russian oil, we could see Brent crude at $120 in a heartbeat,” Stephen Innes, managing director of SPI Asset Management, said in a note.