USA: 50 million barrels of oil released in a coordinated way … and the price rises …

23 November 20212 years ago babelfish

As widely expected, the White House has announced that it will release 50 million barrels of crude oil from its Strategic Oil Reserve in concert with China, Japan, India and South Korea, the White House said in a statement, a coordinated operation without previous. attempt by three of the world's largest oil consumers to tame prices that could provoke a reaction from OPEC +. Indeed, perhaps it has already caused it …

The release, which as we have noted will come in the form of SPR Volume Exchange, i.e. in the medium term future the SPR will have to replenish the shares sold. almost certainly at higher prices, and will amount to 32 million barrels, and is in line with expectations of 30-35 million; as a reminder, 18 million have already been cleared by Congress and will be accelerated in their execution.

News of a coordinated release comes hours after Bloomberg reported that India plans to sell around 5 million barrels of oil from its strategic oil holdings as part of a coordinated move with the US and other allies to lobby. on prices. Indian crude will be sold to refineries, including those operated by Mangalore Refinery and Petrochemicals Ltd. and Hindustan Petroleum Corp., which raised the share price due to the implied profit contained in the move. Although the volume is the equivalent of less than half of India's daily crude oil consumption, the release is symbolic as it shows oil consumers are willing to unite against OPEC's control of markets.

Well, good, but the results were laughable, indeed we clearly say counterproductive. Let's see the prices of the WTI which, in the last few days, had been falling quite sensibly.

Instead of falling, the price actually increased after the announcement of the release of the stocks. The White House has launched an energy boomerang.

This happened for more than one reason:

First of all, the barrels released were few, 50 million for the US in total, when the daily requirement is equal to 20 million barrels in the US alone. You understand that it is a drop in the ocean;
So let's remember that markets act on forecasts and reverse on announcements. The White House move had been anticipated for a long time, so the official announcement came in a reversal.
The reserves are so low that this limited release is seen as a desperate move. After all, the reserves are at the lowest level since 2003 …

So if Biden's desire was to control fuel prices, and hence inflation, he was able to do the exact opposite. The proof that oil is either one or not.

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The US article : 50 million barrels of oil released in a coordinated way… and the price rises… comes from ScenariEconomici.it .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/usa-liberati-in-modo-coordinato-50-milioni-di-barili-di-petrolio-e-il-prezzo-aumenta/ on Tue, 23 Nov 2021 17:50:01 +0000.