(Reuters) - The Biden administration's plan to continue releasing the Strategic Petroleum Reserves (SPR) "as appropriate" to bring down retail rates poses limited downside from current crude price levels, Goldman Sachs (NYSE:GS) said in a note dated Thursday.
President Joe Biden on Wednesday said the United States will sell 15 million barrels (mb) from the nation's SPR by year-end, intended to prevent oil price spikes in the wake of a decision by OPEC+ oil-producing nations to cut oil production.
The announcement, however failed to ease oil prices, as official U.S. data showed the SPR last week dropped to their lowest since mid-1984, while commercial oil stocks fell unexpectedly. [EIA/S] [O/R]
"We find incremental SPR sales as the most likely action (16 mb is available from FY2023 Congressionally mandated sales), although this remains price dependent... Such a release is likely to have only a modest influence (<$5/bbl) on oil prices however," the bank said.
Retail gasoline prices would likely need to be higher than present levels in order to warrant such a release, Goldman said, adding the threshold is likely to shift significantly higher toward the $125/bbl crude, or $5/gal retail gasoline range once the political hurdle of the November U.S. midterm elections has been overcome.
On the outcomes of the United States considering a possible product export ban, Goldman cautioned that such a ban could send wholesale global distillate and gasoline prices up by $150/bbl and $50/bbl respectively, and would still risk shortages and higher domestic prices.
The bank had this month raised its 2022 Brent price forecast to $104 per barrel, and 2023 forecast to $110 per barrel as it expected the 2 million bpd output cut by OPEC+ producers to be "very bullish" for prices.