Crude Oil Drops As US Prepares To Release Stores Into Market
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Summary:
- Likelihood of extra barrels being released from strategic reserves.
- Concerns about a tight market as the winter season approaches.
- Prices have decreased by approximately a third.
Crude Oil Drops
The likelihood of extra barrels being released from strategic reserves helped to allay market concerns about a tight market as the winter season approaches.
In yet another erratic session, West Texas Intermediate fell as much as 2.4% to trade under $84 per barrel. In order to increase supply, the US is working toward releasing more barrels from its strategic oil reserve. Crude continues to trade in the wide range it has been in for the past month, constantly moving in response to global market risk sentiment.
In October's erratic trading of crude, the market was caught between two conflicting factors. Time spreads, important market strength indicators, are indicating tightness ahead of the start of OPEC+ output cuts in November, but adverse market factors like weak Chinese demand and aggressive central bank monetary policy continue to weigh on the market. Additionally, impending penalties from the European Union on Russia have caused several Indian refiners to stop making spot purchases of the nation's crude.
Since early June, prices have decreased by approximately a third, wiping off all the gains achieved during Russia's invasion of Ukraine. The impending implementation of EU sanctions on Moscow's oil trading has prompted merchants and refiners to reserve storage tanks in anticipation of a supply shortage.
According to persons familiar with the situation, the US is moving toward releasing another 10 million to 15 million barrels of oil from the country's emergency reserve in an effort to stabilize markets and prevent gasoline prices from rising higher. Separately, according to two of the sources, the Biden administration is still considering restrictions on gasoline exports.
Crude Oil Price Chart
Sources: finance.yahoo.com
