NEW YORK, Nov. 23 (Xinhua) — U.S. oil prices posted material growth Tuesday following U.S. announcement to release Strategic Petroleum Reserve (SPR) in coordination with other major consuming countries.
The watered-down arrangement in release of U.S. crude oil reserves and pricing-in of the SPR release in earlier days triggered a rebound of oil prices on Tuesday, according to industry analysts.
The U.S. Department of Energy will make available releases of 50 million barrels of oil from the SPR to lower oil prices and address the mismatch between demand exiting the pandemic and supply, the White House said.
Of the 50 million barrels, 32 million barrels will be an exchange over the next several months, releasing oil that will eventually return to the SPR in the years ahead, according to the White House.
This planned release will only have a short-term impact on price, according to Phil Flynn, senior market analyst with The Price Futures Group.
“While that might seem like a good idea, history has proven that the release will only have a short-term impact on prices,” said Flynn.
But details of the U.S. SPR release plan, including the use of swaps, which means oil purchased from the SPR must be returned in the next one to three years, may have blunted the impact somewhat, said a report by MarketWatch quoting Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.
The actual impact from SPR releases would likely be brief while downside risk to both outright prices and demand has returned for the time being due to renewed concerns on COVID-19 pandemic in Europe, according to a research note by JBC energy issued on Monday.
The West Texas Intermediate (WTI) for January delivery increased by 1.75 U.S. dollars to settle at 78.50 U.S. dollars a barrel on the New York Mercantile Exchange. Enditem
Vehicles are seen near the White House in Washington, D.C., the United States, on Nov. 23, 2021. The U.S. Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) to lower oil prices and address the mismatch between demand exiting the pandemic and supply, the White House said. (Photo by Ting Shen/Xinhua)
Vehicles are seen near the White House in Washington, D.C., the United States, on Nov. 23, 2021. The U.S. Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) to lower oil prices and address the mismatch between demand exiting the pandemic and supply, the White House said. (Photo by Ting Shen/Xinhua)
Vehicles are seen near the White House in Washington, D.C., the United States, on Nov. 23, 2021. The U.S. Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) to lower oil prices and address the mismatch between demand exiting the pandemic and supply, the White House said. (Photo by Ting Shen/Xinhua)
Vehicles are seen near the White House in Washington, D.C., the United States, on Nov. 23, 2021. The U.S. Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) to lower oil prices and address the mismatch between demand exiting the pandemic and supply, the White House said. (Photo by Ting Shen/Xinhua)
Vehicles are seen near the White House in Washington, D.C., the United States, on Nov. 23, 2021. The U.S. Department of Energy will make available releases of 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) to lower oil prices and address the mismatch between demand exiting the pandemic and supply, the White House said. (Photo by Ting Shen/Xinhua)
