Why have the oil prices fall so sharply on Monday morning on 11th of April?

Since morning on Monday, 11th April, Brent and WTI Crude have fallen over 2.6%. Brent Crude is currently quoting exactly around the $100/bbl while WTI crude is trading at $95.40/bbl. Since December, oil has been subject to highly volatile moves. From $69/bbl in December 2021, oil rallied all the way to $139/bbl in March 2022, although it has fallen sharply from there. The rally was on the back of supply chain bottlenecks created by the Russia Ukraine war and fears that sanctions on Russia would hurt oil supply deeply

Here are some key reasons why the price of oil has fallen so sharply on Monday.

· IEA members will be releasing 60 million barrels of crude from reserves over next 6 months. This may look small but it is big for market sentiments. That is the one reason.

· American and Canadian shale producers will substantially enhance production. The US shale producers added 13 oil rigs in the latest week and this is a lead indicator of a surge in supply in coming weeks and narrowing of the oil deficit in the global market.

· China is crushing oil demand. It has just announced an extension of the lockdown in Shanghai. This is due to the resurgence of COVID cases and China is quite paranoid about the rise in cases. This is likely to keep tabs on Chinese oil demand.

· Russian oil supply destruction has not gone as per expectations. Western Europe still buys oil from Russia. China and India have been helping Russia to offset some of the excess supply. All this is dampening prices in oil.