On Thursday, oil companies saw their shares go down as major Asian consumers are assessing to release their own oil reserves, bringing prices to the lowest in weeks.
Previously on Wednesday, US President Joe Biden was reported to ask the world’s key oil consumers which included China, India, and Japan to consider releasing their own crude inventories in a coordinated measure to lower the soaring global energy prices.
Washington’s request came as the soaring energy prices are strengthening the global inflationary pressures, which force central banks to tone down their pandemic-era stimulus policies.
China said that it was working to release some of its reserves but did not provide a comment on the US request.
Other Asian countries were also looking into it, although they already said they could not release reserves to cool oil prices.
In Europe, the oil and gas stock index was the biggest sectoral loser as it lost 2.1% which deleted a part of the hefty gains from the current rally in prices. However, year-to-date, the level was still up by 20%, almost in line with the 22% gain for the broader market.
European oil giants Royal Dutch Shell, TotalEnergies, and BP have seen their shares slumped between 1.4% and 2.3%.
Economist Michele Pedroni at DECALIA commented, "Even though oil demand remains good, today's news has rung the first alarm bell to start scaling back the rally that we've seen over the past few months.”
In the US, big energy companies ExxonMobil, Chevron, and ConocoPhillips’ shares fell between 0.1-1.5% in early trading on Wall Street, following losses in the previous session when oil producers warned of impending oversupply. The S&P 500 Energy index was dragged down to the lowest level in five weeks.
On Thursday, Brent crude dipped to the lowest in six weeks in the early trading at USD79.28/barrel but was up slightly later on. US WTI hit the lowest price since early October by falling 1.6% to USD77.08/barrel.
On a related note, Biden also ordered the US Federal Trade Commission to investigate possible illegal conduct by oil and gas companies.
