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Russian playwright Anton Chekhov’s advice on writing applies also to oil, where the US strategic petroleum reserve (SPR) has long loomed over the market, but rarely been used. Now US President Joe Biden intends to give the market both barrels.
The U.S. administration has approved the release of another 13.4 million barrels of crude from the strategic petroleum reserve in a move first announced last November by the White House as an attempt to ease upward pressure on fuel prices.
WTI prints mild gains above $78.00, near $78.20 during Thursday’s Asian session on the hawkish hopes from the Organization of the Petroleum Exporting Countries (OPEC). The black gold took a U-turn from the weekly high to snap a two-day uptrend the previous day after supply concerns escalated. Also adding to the upside filter was the weekly official oil inventories from the US Energy Information Administration (EIA). It should be noted that the EIA Crude Oil Stocks Change rose to +1.017M versus -0.481M forecasts and -2.101M prior.
Analysts at Goldman Sachs offer their take on the US oil release from the Strategic Petroleum Release (SPR) and any ban of oil exports from the US. “Both the release of oil from reserves and any ban of oil exports from the US are ineffective.” “At present, the US exports around 3m barrels of crude a day. If this export stopped domestic pipelines would be unable to reroute that crude to US refiners. The refiners do not have enough capacity to process it.”
The OPEC+ group is not concerned about a possible release from the U.S. Strategic Petroleum Reserve (SPR), according to Oman's Energy Minister Mohammed Al-Rumhi cited by FXStreet. U.S. President Joe Biden is considering a possible release from the strategic American crude stockpiles as a way to bring down high gasoline prices. No decision has been made yet amid debates within the Administration, but calls for a release from the SPR have become louder in recent days.
Oil reversed losses to close slightly higher after another day passed without an announcement from the Biden Administration to tap U.S. crude reserves. Futures in New York closed up 0.1% Monday, paring earlier losses of as much as 1.8%. Biden faces increased pressure from members of his own party to release oil from the Strategic Peroleum Reserve to quell rising gasoline prices. Meanwhile, the U.S. government projected that the country’s shale out would climb 85,000 barrels a day in December.