Oil prices turned higher on Thursday, with Brent crude rising above $80 again, after falling earlier in the session, with major oil consumers heading to release strategic reserves.
Today, Thursday, China announced its intention to release reserves, in the wake of the United States’ request from major oil consumers to issue a coordinated stockpile in order to counteract rising prices.
Oil prices fell by about 3%, at the end of trading on Wednesday, to its lowest level since early October, with the release of official data on oil stocks in the United States.
Oil Prices Today
By 01:45 pm GMT (04:45 pm Mecca Al-Mukarramah), Brent crude futures prices – January 2022 delivery – rose by about 0.4%, recording $80.62 a barrel, after falling at $79.28 early. of transactions.
The price of West Texas Intermediate crude futures – for December delivery – also rose 0.2%, recording $78.52 a barrel.
The US administration’s request comes from major oil consumers in order to shock the markets; China called for concerted action for the first time, as inflationary pressures, driven in part by rising energy prices, began to trigger a political backlash; As the world intermittently recovers from the worst health crisis in a century.
Oil prices reached a 7-year high in October; The market focused on the rapid recovery in demand that coincided with the lifting of the closure in exchange for a slow increase in supplies from the Organization of Petroleum Exporting Countries “OPEC” and its allies from abroad led by Russia in the alliance known as OPEC +.
Citigroup analysts said: “If the US administration orders the release of the strategic oil reserve, it could send a strong political signal, referring to production margins for gasoline and other auto fuels.. But it is unlikely that domestic refineries will receive an additional benefit, as it appears that Revenues for light products have crossed the limit.”
American producers were also reluctant to overspend on exploration after they were punished by investors for gobbling up debt to pay for new exploration costs.
The International Energy Agency and OPEC have said in recent weeks that more supplies will be available in the next several months, and OPEC + maintains an agreement to increase production at a daily rate of 400,000 barrels per month; So as not to flood the market with supplies.
“The release of strategic stocks is likely to temporarily lower oil prices,” said Vivek Dar, commodity analyst at Commonwealth Bank of Australia, noting that there is a high probability that markets have already priced in such an event.
The United States and its allies coordinated the release of strategic oil reserves before, for example in 2011 during the war in Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC).
Despite this, the current proposal presents an unprecedented challenge to OPEC, which has affected oil prices for more than 5 decades; Because it includes China, the world’s largest importer of crude.
China’s State Reserve Office said it was working to release crude oil reserves, although it declined to comment on the US request.
A Japanese Ministry of Industry official said the United States had requested Tokyo’s cooperation in dealing with high oil prices, but he could not confirm whether the request included coordinated releases of stocks.
Under the law, Japan cannot use reserve issuances to lower prices, the official said.
A South Korean official confirmed that the United States had asked Seoul to release some oil reserves.
The official explained, “We are carefully reviewing the US demand, however; we do not release oil reserves due to high oil prices. We can release oil reserves in the event of an imbalance in supply, but we do not respond to high oil prices.”
The US Department of Energy said, in its weekly report on inventories, late on Wednesday, that crude stocks fell unexpectedly last week; Refineries, which have profitable processing rates, increased production ahead of the winter heating season.
SOURCE : REUTERS