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Oil Dips After Modest US Crude Build, Larger Reserve Release Plan

CommoditiesNov 24, 2021 03:21PM ET
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© Reuters.

(Updates with OPEC comments on SPR release)

By Barani Krishnan

Investing.com - Oil markets dipped Wednesday as traders took stock of a modest weekly build in U.S. crude stockpiles, reported a day after the United States and several other countries announced a coordinated release of their crude reserves in a bid to cool runaway fuel prices 

The 50-million barrel crude release from the U.S. Strategic Petroleum Reserve, which will hit physical markets in December, barely registered on the psyche of traders when the Biden administration announced it 24 hours ago. 

Crude prices rose as much as 3% by Tuesday’s close as many market participants dismissed the SPR release as a “drop in the barrel” — despite last week’s 6% selloff that sent prices to eight-week lows after initial reports about the administration’s plans to counter OPEC+ production squeezes. In a sense, it was a “sell-on-rumor-buy-on-fact” trade.

But market reactions on Wednesday suggested that some in the trade at least were giving deeper thought to the SPR release.

The Saudi-run OPEC bloc, which dominates the broader OPEC+ alliance, said the oil market may have a surplus supply of 2.3 mln barrels per day in January, and 3.7 mln bpd in February.

 “OPEC panel predicts that the SPR release will increase oversupply by 1.1 million barrels per day,” the cartel said in a document that seemed prepared to justify more supply tightening on its part rather than to disprove those who criticized the release as inadequate to change any market fundamentals.

At Wednesday’s settlement, WTI, or the West Texas Intermediate benchmark for U.S. crude, was down 11 cents or 0.14%, at $78.39 per barrel. 

London-traded Brent crude, the global benchmark for oil, settled down 6 cents, or 0.07%, at $82.25 per barrel. 

Wednesday’s sluggish market action also came after the Energy Information Administration reported that crude stockpiles rose by 1.017 million barrels last week, versus analysts' expectations for a draw of 481,000 barrels.

Gasoline inventories showed a draw of 603,000 barrels last week, the EIA said, compared with expectations for a draw of 461,000 barrels.

Distillates stockpiles, which include diesel and heating oil, declined by 1.968 million barrels in the week against expectations for a draw of 1.002 million barrels, the EIA data showed.

Also weighing somewhat on sentiment was the Paris-based International Energy Agency which accused OPEC+ and Russia’s Gazprom (MCX:GAZP) as “creating fake tightness in the energy markets”.

“There is enough oil and gas, it just doesn't reach customers,” IEA executive director Fatih Birol said. “Certain major oil producers are taking an unhelpful stance.”

(With additional reporting by Sam Boughedda)

Oil Dips After Modest US Crude Build, Larger Reserve Release Plan
 

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Comments (9)
Mir Chang
Mir Chang Nov 25, 2021 2:03AM ET
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It takes months for crude oil in oil ships to transport from america to asia.
samuel eyo
samuel eyo Nov 25, 2021 1:15AM ET
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This could give the US economy a healthy ending this year.
Jokers R Us
Jokers R Us Nov 24, 2021 6:11PM ET
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Their plan to suffocate the world economy is backfiring
Mir Chang
Mir Chang Nov 24, 2021 6:11PM ET
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Opec has to sell high crude prices to sustain their high interest rates. Crude buyers like usa, japan, china and india already have enough cash to buy it.
Gayle Williams
Gayle Williams Nov 24, 2021 11:36AM ET
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the U.S. consumes approximately 20 million barrels a day. this is barely news worthy!
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Andrew Ulferts
Andrew Ulferts Nov 24, 2021 11:36AM ET
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Barani Krishnan There is a lack of reporting that happens too, correct? The fact that SPR bbls have been released steadily since April, yet every report around likes to highlight a crude build from the API or EIA (which are always millions of bbls apart) but no one ever mentions how much was imported or released from the SPR that week. It mat not be you that had an agenda, and from what I can tell you do not. But investors are being manipulated on a daily basis by the “news.”
Andrew Ulferts
Andrew Ulferts Nov 24, 2021 11:36AM ET
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Barani Krishnan
Barani Krishnan Nov 24, 2021 11:36AM ET
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Andrew Ulferts  By all means, take it up with the powers that be. My point, Andrew, is the bellicose nature of the comments often aimed at us, the writers at Investing, by the long-oil crowd when the data doesn't suit its bias.
Barani Krishnan
Barani Krishnan Nov 24, 2021 11:36AM ET
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Andrew Ulferts  But thanks for the rather polite, well thought response, Andrew. You certainly stand out from the rest here. Bests.
Mir Chang
Mir Chang Nov 24, 2021 11:36AM ET
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Itll be 50M a day if the cold weather gets worse. By dec, we might hit 10F. By the winter, 50M a day is easily not enough.
Wilson Ndungu
Wilson Ndungu Nov 24, 2021 11:22AM ET
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UScrude oil brew my account
Weliton Lucas
Weliton Lucas Nov 24, 2021 11:07AM ET
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rose by
Wankel YU
Wankel YU Nov 24, 2021 11:01AM ET
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joke, jmp+CME can make it -40
Heine Pedersen
Heine Pedersen Nov 24, 2021 11:01AM ET
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It already been decided that oil will go to 100$ a barrel. Some on Wall Street is dying to get out of the fossil fuel industry.. In 'a good way'. Probably by new year.
Mir Chang
Mir Chang Nov 24, 2021 11:01AM ET
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Thats why you see so many open interest on the $100 calls on the futures options market.
Mark McMillan
Mark McMillan Nov 24, 2021 10:56AM ET
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whatever. 50 million about to be drained for mainly China and India.
trevor hron
trevor hron Nov 24, 2021 10:56AM ET
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China doesnt buy our oil.
Steven king
Steven king Nov 24, 2021 10:56AM ET
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trevor hron You said that...? research maybe needed
Mir Chang
Mir Chang Nov 24, 2021 10:56AM ET
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trevor hron right like they buy sanctioned russia oil.
 
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