The US continues to dump its Strategic Petroleum Reserve like there is no tomorrow.The government is now down to 33 days worth of oil supply at its current implied demand.That is one of its lowest levels in history. pic.twitter.com/IZ4XNoJl77— Otavio (Tavi) Costa (@TaviCosta) March 17, 2022
So first off, I'd stop looking for "explanations" for things like commodity prices, since the market is so irrational that they often don't hold weight. But the primary reason oil is down right now is because of covid headwinds in China and elsewhere. If covid gets out of control in China, that fucks all the supply chains and demand for oil will drop because everything's so slow you don't need to buy any more to move stuff around as nothing's getting moved anyway. The headwinds of slowed economic activity due to another potential lockdown, as covid is also kicking off in Europe again, are stronger than the winds blowing the opposite way re: Russian oil embargoes.
So first off, I'd stop looking for "explanations" for things like commodity prices, since the market is so irrational that they often don't hold weight. But the primary reason oil is down right now is because of covid headwinds in China and elsewhere. If covid gets out of control in China, that fucks all the supply chains and demand for oil will drop because everything's so slow you don't need to buy any more to move stuff around as nothing's getting moved anyway. The headwinds of slowed economic activity due to another potential lockdown, as covid is also kicking off in Europe again, are stronger than the winds blowing the opposite way re: Russian oil embargoes.