Oil benchmarks on track for biggest weekly losses in 2 years

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By Shadia Nasralla

LONDON (Reuters) – Oil moved in and out of negative territory on Friday as members of the International Energy Agency (IEA) were to discuss a further addition of oil reserves to the market alongside a planned release of 180 million barrels by the United States.

Benchmark Brent and WTI contracts were both on track for their biggest weekly declines in two years, at 14% and 13% respectively.

Brent crude futures were down 63 cents, or 0.6%, at $104.08 a barrel at 13:13 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 99 cents, or 1%, at $99.29.

On Thursday, US President Joe Biden announced a release of 1 million barrels per day (bpd) of crude oil for six months from May, the largest release ever from the US Strategic Petroleum Reserve (SPR).

IEA members were due to meet at 12:00 GMT on Friday to discuss a new emergency oil spill.

OPEC+, which includes the Organization of the Petroleum Exporting Countries and its allies including Russia, on Thursday stuck to plans for a 432,000 bpd increase over its May production target despite the Western pressure to add more.

“The impending flood of US barrels does not change the fact that the market will struggle to find enough supply in the months ahead,” said PVM analyst Stephen Brennock.

“The US publication pales in comparison to expectations that 3 million bpd of Russian oil will be on hold as sanctions bite and buyers reject purchases.”

In a bearish signal for demand, Shanghai’s Chinese mall came to a halt on Friday after the government locked down most of the city’s 26 million residents, in a bid to stop the spread of COVID-19.

JPMorgan said in a note that it kept its price forecast unchanged at $114 a barrel for the second quarter and $101 a barrel in the second half of this year.

“Essentially, we recognize that a release of oil inventories is not a persistent source of supply, and if blocked Russian barrels average more than 1 million bpd next year, that will leave 2023 in deep deficit, making our price forecast of $98/bbl for the year too low,” the bank said.

(Additional reporting by Sonali Paul in Melbourne and Isabel Kua in Singapore; Editing by Jason Neely and Jan Harvey)

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