How have oil markets interpreted statements by Novak, US Energy Secretary

WTI crude oil, which had fallen by 3% in earlier trading, reduced its losses by 2% to end at $69.215 per barrel, returning to levels that are not much higher than they were almost two years ago. To end the day at slightly under $75 a barrel, Brent crude fell by about 1%. Oil is under pressure after US Energy Secretary Jennifer Granholm warned Congress on Thursday that it will be “difficult” to take advantage of the present drop in oil prices and that it may take many years to replenish the nation’s Strategic Petroleum Reserve (SPR).

Oil prices dipped on Friday after European banking shares tumbled and after U.S. Energy Secretary Jennifer Granholm indicated that it may take several years to restock the nation’s Strategic Petroleum Reserve (SPR), which dimmed demand projections.

To reach $74.99, Brent crude lost 92 cents, or 1.2%. The price of West Texas Intermediate U.S. oil futures decreased by 70 cents, or 1%, to $69.26 a barrel.

When unrest in the banking sector subsided this week, both benchmarks increased. While U.S. crude futures increased 3.8% throughout the week, Brent futures increased 2.8%. Both benchmarks experienced their largest drops in weeks last week. There is a newly discovered association with stocks. The oil market seems to be riding along macroeconomic headwinds.

Banking stocks slid in Europe with Deutsche Bank and UBS Group slammed by worries that the worst problems in the sector since the 2008 financial crisis could persist. The Financial Stability Oversight Council held an unprepared meeting on Friday morning at the invitation of US Treasury Secretary Janet Yellen.

The dollar’s 0.6% increase versus a basket of currencies put pressure on oil prices and made petroleum more expensive for holders of other currencies. The White House said in October it would buy back oil for the SPR when prices were at or below about $67-$72 per barrel.

On Thursday, Granholm told lawmakers it would be difficult to take advantage of low prices this year to add to stockpiles, which are at their lowest level since 1983 following sales directed by President Joe Biden last year.

Strong forecasts for Chinese demand helped to support the price of oil. According to Goldman Sachs, the world’s largest oil importer is experiencing a surge in commodity demand, with oil consumption exceeding 16 million bpd.

According to the RIA Novosti news agency, Russian Deputy Prime Minister Alexander Novak stated that a previously announced reduction in Russia’s oil production of 500,000 barrels per day (bpd) would be from an output level of 10.2 million bpd in February. Hence, according to Novak, Russia plans to produce 9.7 million bpd between March and June, a far less output reduction than Moscow originally suggested.