Oil price is bid, above the $100 support line. China lockdown/s didn't dent the price as much as anticipated, Biden's emergency SPR oil release begins in May 2022, already priced into the oil futures markets. Will Germany ban Russian oil and gas?
China's clunky lockdown measures, despite them being strict and austere, all the while China is suffering from food inflation, was an attempt at brining down COVID infection rates as a propaganda cue, which, as we know is an unfortunate benchmark - viewed and used by the many conspiracy theorists, who have been a pain in the a-hole during this pandemic, have maintained their lunacy. Yet, this time it has been Western governments that have been front and center and everybody else in between (the 3rd dosed vaccinated, myself included), who have viewed the Chinese measures has extreme. Even through throughout 2020 and 2021 it was the West in its necessity, who had to lockdown before the vaccines were delivered. And at that time, it was China, who touted in their antagonism that they didn't need to be so extreme. Remember the 2020 Wuhan pool party? Hence their zero-Covid policy seem to have 'worked'. Of course, politics and viruses don't mix or maybe, at the end of the day, they do. However, what it does show is how asymmetric global governments have been in their response to this pandemic. All at our own folly.
Till the next mutation or viral outbreak.
In the meantime, the lock down of Shanghai, with a population of over 26 million did not dent the oil price as extremely as one would have thought, mixed with Biden's historic soon-to-be release of the Strategic Petroleum Reserves or SPR beginning in May 2022, the futures market has already priced out the impact that the SPR will have on the oil price. Note the Chart. 1, with price indictors for 2022/03/29, when China locked down Shanghai, the price dropped from $106 to $100, the Putin 'put' at $100 held, until 2022/04/06 when China reported over 25,000 new cases of Covid-19, the Oil price collapsed from $104 to $96, with the possibility that Hedge Finds were short covering their losses. The price continued to plunge, passing through the $95 price support. After hitting lows at $93, the oil price has climbed back over $100 and is now trading at $101.
And the reason? Russia. With the war in Ukraine s in full swing with Russian forces now trying to cut Ukraine in half while weakening the Western side, by destroying it completely. European governments are stuck, particularly Germany who is still accessing Russian oil and gas, while the Germans are enduring widespread energy inflation. There is a frantic effort to ween off Russian oil. Which could be sooner, rather than later.
Bonus *Chart*: Wheat prices. Russia being the largest wheat exporter to the world. Global supply chain shocks + oil/food inflation. = Prices are outstripping supply. Which would also indicate that costs of producing and exporting grains are sky rocking. A discussion for another day.
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