By Gina Lee
Investing.com – Oil was down on Friday morning in Asia, falling around $1. The U.S. and allies are considering releasing more oil from storage to increase supply and cool soaring prices, with investors also facing higher costs for trading Brent futures.
Brent oil futures were down 0.42% to $118.53 by 1:29 AM ET (5:29 AM GMT) after falling 2.1% during the previous session. WTI futures fell 0.45% to $111.84, having tumbled 2.3% on Thursday.
However, both Brent and WTI futures could record their first weekly gains in three weeks, with Brent on set for a 10% jump and WTI on course for a 7% rise as fears of tight supply continue. Western sanctions against Russia, the second-largest crude exporter globally, in response to its invasion of Ukraine on Feb. 24, also remain in place.
Adding to supply concerns, the Caspian Pipeline Consortium (CPC) terminal on Russia's Black Sea coast stopped exports on Wednesday due to storm damage. Kazazkstan said on Thursday it expects the CPC to resume shipping crude within a month but added it could reroute some oil towards tankers on the Caspian Sea as well as to pipelines going to Russia's Samara and China.
"It's tough to be short oil as U.S. inventories continue to dwindle, (and) as we are bound to have more supply shocks in the future," SPI Asset Management managing partner Stephen Innes told Reuters.
In another sign of market volatility, the Intercontinental Exchange (NYSE:ICE) raised margin rates for Brent futures, with margins up 19% for the May contract as of Friday. It is the third rise in 2022 to date and makes Brent futures more expensive to trade.
Meanwhile, the U.S. and allies are discussing a possible further coordinated release of oil from storage, U.S. Secretary of Energy Jennifer Granholm said on Thursday, which helped ease prices. The U.S. is also set to unveil a deal later in the day to supply Europe with more U.S. liquefied natural gas (LNG) in 2022 and 2023, sources familiar with the matter told Reuters.