Upon hopes of US releasing more barrels from its Strategic Petroleum Reserves
Crude oil prices continued their fall yesterday, with West Texas Intermediate [WTI] dipping to levels not witnessed since before the OPEC+ meeting in Vienna.
The price dip is in part attributed to talks about releasing more barrels from the U.S. Strategic Petroleum Reserves [SPR].
Initial reports suggested that the Joe Biden administration could release another 10 million barrels and 15 million barrels from the nation’s SPR.
An Environmental Impact Assessment [EIA] report shows that the November contract for WTI crude fell to $83.22 per barrel yesterday afternoon, sliding 2.64% from Monday.
The report noted that the last time WTI was this low was days before OPEC+ met, when the group decided to cut 2 million barrels per day from its production targets starting in November.
Later reports, however, clarified that the figure discussed was part of the 180 million barrels set to be released between March and October, previously disclosed by the Biden administration.
The oil could be sold this week, and would be the final tranche of the 180 million barrels, the report said, adding that oil markets, however, are still skittish that the United States could release even more oil from the SPR to counteract high gasoline prices ahead of midterm elections.
The United States is congressionally mandated to sell another 26 million barrels of crude from the SPR in the fiscal year 2023, which began on October 1, sparking worry that the US could move to release this in short order, rather than spread out throughout the year.
The U.S. Strategic Petroleum Reserves has fallen to 405 million barrels so far this year, from 593 million barrels in inventory at the start of the year, according to official EIA data. It is the lowest amount of crude oil in the SPR inventory since June, 1984.
Aside from the Strategic Petroleum Reserves release, another factor weighing on oil prices is the persistent fear of recession, which could sap oil demand.
Oil prices have seen choppy movements in recent trading sessions, with fears that the U.S. and EU will continue facing headwinds in taming inflation still dominating the public discourse across the Atlantic Basin.
Earlier this week, the bearishness of the US/EU was somewhat offset by Chinese promises of stimulating the economy and reorienting their oil industry to a more export-oriented focus.
However, in yesterday’s trading the Chinese spell has all but disappeared after Beijing delayed the publication of official data, without giving a specific date for the delayed issuance.
With the White House chipping in with rumors of potential SPR releases further out, ICE Brent dropped below $90/barrel again.