IEA emergency dump suppresses supply disruption fears, U.S. oil soars more than 11%

On Tuesday (March 1), crude oil ended up 9.
4% at $107.
18 a barrel, the highest since
July 2014.
Members of the International Energy Agency (IEA), including the United States and Japan, agreed to release 60 million barrels of crude oil from reserves in an effort to curb the sharp rise
in oil prices.
However, the news has heightened concerns that supply will not be enough to compensate for growing energy disruptions
.
This round of crude oil releases is less than the global consumption in a day
.
In addition to crude oil, U.
S.
heating oil and gasoline futures also hit their highest
since 2014.

API crude oil inventories fell by 6.
1 million barrels, gasoline inventories by 2.
5 million barrels, refined oil inventories by 392,000 barrels and Cushing crude inventories by 1.
018 million barrels
in the week ended Feb.
23, API data released earlier.
Oil prices edged higher
after the data.

The U.
S.
Department of Energy told reporters after an extraordinary ministerial meeting of the IEA's 31-member state that half of the 60 million barrels of oil reserves will come from the United States
.
The IEA mainly represents industrialized countries
.
Craig Erlam, senior market analyst at OANDA, said: "The release of oil reserves is worth watching, but as we saw last November, this is not seen at all as a
game-changer.
He was referring to an earlier round of U.
S.
-led stockpile releases
.
The political risk premium for a crisis involving one of the world's largest oil producers is simply too high
.

John Kilduff, a partner at Again Capital, said oil prices are climbing
along the wall of worry about the war in Ukraine.
Traders were disappointed
with the size of the strategic reserve freed.
The US-led sanctions against Russia basically did not explicitly target the energy industry, but traders have avoided trading Russian crude oil, resulting in a sharp discount in the price of Russian crude oil and tightening the supply of other types of crude oil
.

Bart Melek, head of commodity strategy at TD Securities, said we are afraid of losing Russian supplies
.
The amount of reserves released this time does not seem to be enough
.
Options positions further consolidated the oil rally
.
At key levels such as $100, traders accumulate large long positions, and crude oil rally more like cooking oil
as banks buy futures as a counterhome to hedge risk.

Banks including Goldman Sachs, Morgan Stanley and JPMorgan Chase have raised their oil price forecasts, anticipating possible supply disruptions
.
Consultancy OilX said the likelihood of disruptions to Russian offshore crude and refined products supplies was rising, which could push oil prices above $
150 a barrel.

OPEC production in February was 28.
39 million b/d, up 420,000 b/d from the previous month and above the 254,000 b/d
increase required by the supply deal, the survey found.
As demand recovers from the pandemic, OPEC+ is gradually easing its 2020 production cut agreement
.
OPEC+ will meet on Wednesday and is expected to confirm the previously agreed plan, even as oil prices soared to a seven-year high of more than $105 a barrel after
Russia's invasion of Ukraine.

An OPEC+ representative said of Wednesday's meeting, "It looks like the plan will stick to the plan
.
" He also said that Russia's actions in Ukraine have so far not affected the operation
of OPEC+.
On Tuesday, the Saudi cabinet reaffirmed its commitment
to the OPEC+ deal.

All Brent crude futures and U.
S.
crude futures contracts expiring in October and before are in what Mizuho Energy Futures executive director Robert Yawger calls "super contrarians," meaning that each month's contract price is at least $1 below the previous month
.

It should be noted that Ed Markey, a Massachusetts Democrat and member of the Senate Foreign Relations Committee, introduced a bill on Tuesday that would ban all Russian exports
of crude oil and petroleum products to the United States.
Meanwhile, Congressman Joe Manchin, a West Virginia Democrat, is leading a push to expand oil drilling in the U.
S.
to boost exports
to NATO allies.

(U.
S.
oil hourly chart)