Oil falls about 3% on talks over diesel, crude stock releases
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LONDON, Oct 2 : Oil prices fell about 3 per cent and European gasoil futures dropped over 5 per cent on Friday after reports of talks on additional diesel and crude stock releases, easing concerns over tight global energy supplies.
Brent fell $2.83, or 2.77 per cent, to $99.48 a barrel at 0842 GMT. West Texas Intermediate dropped $3.35, or 3.61 per cent, to $89.52 a barrel.
Both benchmark contracts were poised for a weekly decline, with Brent down about 4.7 per cent so far for the week and WTI lower by around 3.1 per cent.
European gasoil futures, a benchmark for diesel prices, fell more than 5 per cent to $1,377 a metric ton.
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"The whole energy complex trades lower, led by gasoil and ULSD, as EU countries discuss releasing fuel and crude stockpiles to ease acute market tightness and help avert a potential US diesel export ban," Ole Hansen, head of commodity strategy at Saxo Bank, said.
FRENCH PROPOSAL
European Union countries on Friday discussed a French proposal to release additional diesel stockpiles, in response to US pressure on European nations to unleash more supplies in an attempt to reduce surging fuel prices, a source familiar with details of the discussion told Reuters on Friday.
In a call on Friday, EU countries' governments discussed a French proposal for European countries to release 50 million barrels of diesel, and for International Energy Agency members to release 50 million barrels of crude oil, the source said.
"This highlights that the main stress in the energy market is no longer crude availability, with Middle East flows recovering, but rather refined product supply, constrained by reduced refinery capacity and output across the Middle East and Russia," Hansen said.
Prices settled higher in the previous session after Reuters reported that Chinese refiners suspended oil product exports for October as Beijing looked to preserve domestic stocks.
Meanwhile, the Wall Street Journal reported that the US was sending a third aircraft carrier and up to 10,000 more troops to the Middle East as President Donald Trump weighed resuming strikes on Iran after the US midterm elections.
"The gradual recovery in oil flows through the Middle East Gulf (including pipeline bypass) has picked up pace of late," Barclays said in a note.
However, the bank said physical market fundamentals remained strong, with inventories continuing to draw and prompt cargoes commanding steep premiums over forward prices.
The bank raised its fourth-quarter Brent forecast by $20 a barrel to $115 and lifted its 2026 forecast to $100 a barrel.
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