Japan plans to release emergency fuel reserves at the request of the US to help cushion rising oil prices.
Crude oil prices were depressed on Monday (22/November), extending losses that have occurred since the Friday session last week.
This weakening was triggered by Japan's plan to release emergency fuel reserves because it judged that the price of oil was too high.
At the time of this news release, Brent oil was at around $78.60 per barrel, while WTI oil was trading at around $76.19 per barrel, down 0.26 percent from the daily Open level.
Following a request from the US, Japanese Prime Minister Fumio Kishida signaled his readiness to help counter rising oil prices by releasing emergency fuel reserves.
If this plan is realized, then Japan will become the second Asian country to release oil reserves after China.
"We will carry out this plan in consideration of what we can do legally on the premise that Japan is cooperating with the United States and other relevant countries," Kishida said.
Oil prices are automatically pressured by the plan.
If Japan releases emergency oil reserves to the domestic market, the volume of Japan's oil imports will decrease.
This of course will suppress the demand for crude oil.
COVID-19 cases spike again, oil at risk of sinking
In addition to the risk of falling demand, oil also faces risks from a surge in European coronavirus cases.
Oil prices plunged more than 3 percent after Austria officially announced a lockdown.
Austria's move is likely to be followed by other European countries which have experienced a spike in cases in recent times.
Germany, Europe's largest economy, has said that it may need to go into full lockdown following Austria if COVID-19 cases don't drop in the near future.
If Germany does impose restrictions, then oil prices have the potential to weaken further and fall below the psychological $70 per barrel level.
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