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WTI crude futures swung between small gains and losses around $76 a barrel on Monday, close to 7-week lows as traders assess the prospects of a coordinated reserve release by major oil-consuming nations while a worsening COVID-19 situation in Europe sparks demand concerns. Prime minister Fumio Kishida said on Saturday that he is considering the release of oil reserves along with the US and other countries to help curb rising crude oil prices. The US previously asked countries including China, Japan, India and South Korea to consider a coordinated release of oil reserves to bring prices down. Meanwhile, the outlook for fuel demand deteriorated amid a resurgence of coronavirus cases in Europe and the US, with Austria reimposing a full lockdown on Monday, while Germany warned that it may follow suit. Elsewhere, Ireland and the Netherlands have also instructed people to work from home where possible.

US natural gas futures traded close to $5 per million British thermal units in the fourth week of November, hovering around two-month lows as low domestic demand and loosening supplies offset strong demand in Asia and Europe. Domestic stockpiles increased by 26bcf in the week ending November 12th, 1bcf above forecasts, while at the same time US energy firms added new natural gas rigs for a third week in a row last week. Also, output in the US lower 48 states averaged 96 bcf per day by mid-November, which compares to a monthly record average of 95.4 bcf per day in November 2019. Still, the world’s three largest LNG importers, China, Japan, and South Korea, are expected to increase discharges of natural gas to 17.77 million tonnes in November, compared to 15.41 million tonnes in October and the most since February. In Europe, the suspension of the Nord Stream 2 pipeline from Russia to Germany means Europe will remain dependent on US LNG exports.

US gasoline futures traded close to $2.2 a gallon in the fourth week of November, around levels not seen since September 30th, as prospects of the world’s largest oil consuming nations releasing strategic reserves gained strength. Following a request by the US President, Japan’s Prime Minister signalled the nation was considering releasing strategic reserves along with the United States, China and other major oil consuming countries in a coordinated effort to bring down fuel prices. Meanwhile, Chinese authorities said crude oil release works were already being carried out last week. Analysts expect the joint release could amount to more or less 115 million barrels but the effect could last as little as three weeks.

Heating oil futures eased to around $2.4 per gallon, the lowest in nearly two months, as traders managed the risks from President Biden’s moves to ease energy prices and monitored domestic inventory data. Official government data showed distillate stocks, which include heating oil, shrank by just 0.82 million barrels in the week ending November 12th, less than the 1.23 million barrel draw that was expected. The US President has recently discussed with major oil consumers like China, India, Japan and South Korea to consider a coordinated release of oil reserves to bring prices down, although so far only China admitted to be working on the matter. Earlier, the National Economic Council was asked to find ways to reduce energy prices and the Federal Trade Commission had been ordered to tackle market manipulation in the energy sector.

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