WTI gains, Brent firm as US releases less oil than expected
05:01, 24 November 2021
US crude oil futures rose on Wednesday in Asia after the US’ announcement on the oil reserve release did not meet market expectations. Brent crude oil edged lower but remained at the $82 level.
West Texas Intermediate (WTI) gained 0.04% to $78.53 per barrel, while the international benchmark Brent crude oil dropped 0.11% to $82.22/bbl.
Brent crude oil closed up more than 3% to $82.31 and WTI ended 2.2% higher on Tuesday at $78.50/bbl on Tuesday after President Joe Biden on Tuesday announced the US will release 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) to tame high energy prices.
“Crude oil gained after a plan to release inventories from reserves was seen as less severe than expected,” analysts at ANZ Research wrote in a note on Wednesday.
Both oil futures dropped to below $80 last week as uncertainty about the SPR release kept markets on the edge.
US’ oil reserve release will be in coordination with the oil reserve release by China, India, South Korea, the UK and Japan. According to ANZ Research, India will release five million barrels; China 7.3 million and smaller amounts are also expected from South Korea and the UK.
However, analysts warned that the action by US and key consuming nations may ignite retaliation from the Saudi Arabia-led Organization of Petroleum Exporting Countries (OPEC).
ING Group in a note on Tuesday, prior to the US announcement, said the resurgence of Covid-19 in Europe coupled with a potential release may be reason enough for OPEC to decide against a production hike of 400,000 barrels per day in its monthly meeting early December.
“The prospect of retaliation from OPEC+ (OPEC and its allies) does leave the potential for further volatility in oil markets,” the group said.