Oil prices consolidated their gains by more than 2%, during trading on Tuesday, with West NYMEX crude rising above $78 a barrel, with the United States announcing the withdrawal of its strategic stockpile.
And crude prices fell by more than 1%, earlier in trading, amid anticipation of the position of OPEC + to increase supplies, as well as the movements of many countries, led by the United States to release the strategic reserve.
Oil prices today
Brent crude futures prices – for January 2022 delivery – rose by 2.1%, recording $81.34 a barrel, after falling to less than $79 earlier in trading.
While the prices of West Texas Intermediate crude futures – January delivery – rose by more than 1.7%, recording $78.07 a barrel, after falling below $76 during trading.
The White House officially announced the withdrawal of the strategic oil reserve by providing up to 50 million barrels.
This quantity includes 32 million barrels provided through the exchange, to be returned by companies, in addition to interest, while the remaining portion -18 million barrels – under the authorization of the US Congress for budgetary matters.
Strategic oil reserves.. Biden administration releases 50 million barrels – (Update)
“Crude oil prices are responding to news that the United States is ready to release a coordinated release of the Strategic Petroleum Reserve later on Tuesday,” said Vandana Hari, founder of energy consulting firm Vanda Insights in Singapore.
He pointed out that the sales are almost silent, as the market awaits the actual announcement, and talks about the release are underway for several weeks, but without any action from the White House.
He stressed that in the event of the actual release, an assessment of the market conditions will be conducted, based on the frequency and size of the barrels that will be released.
Oil’s performance came today, after OPEC delegates said the broader OPEC+ group is reassessing monthly production increases, in response to any release of government oil reserves.
“There are no concerns at the moment about the US and China releasing crude oil from the strategic reserves, because if there is an oversupply in the market, OPEC+ has the option not to increase or reduce production,” a delegate told S&P Global Platts.
The moves come amid a dispute between OPEC + and the group of countries led by US President Joe Biden over the direction of oil prices, with some analysts saying that any government oil stockpile would be large, with estimates ranging between 35 million and 120 million barrels.
“OPEC is sending a signal that if these players do that, they have some barrels they can block, and they will offset the impact of the issuance,” said Phil Flynn, chief analyst at Price Futures in Chicago.
The Secretary-General of the Riyadh-based International Energy Forum, Joseph McMonigle, said on Monday that he expected OPEC + to maintain its plan to gradually add supplies to the market.
He added, “I see them sticking to their current plan in light of the oversupply for next year, which is typical for oil markets in the first quarter… If they are going to make a change, it will be because of unexpected external factors, such as these shutdowns in Europe, any kind of strategic launch, shifts in the demand for jet fuel.
However, analysts said the drop in global oil prices to below $80 a barrel over the past month has “exceeded” market fundamentals, with concerns about the return of coronavirus lockdowns in Europe and China overshadowing an ongoing supply deficit.
Goldman Sachs said that the high-frequency inventory data points to the current imbalance between supply and demand of about 2 million barrels per day over the past four weeks, with OECD and Atlantic Basin crude oil stocks falling to their lowest levels in 7 years.
The World Bank reiterated its expectations that Brent crude prices will average $85 per barrel during the fourth quarter of 2021.
For his part, President of Fact Global Energy Consulting, Feridun Fisherky, indicated that any SPR release would only affect prices for two or three weeks.
Citigroup analysts estimated in a note that the US could release anywhere from 45 million to 60 million barrels of its reserves which would bring in about 20 million already approved sales.
SOURCE : REUTERS