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Oil prices near $80 as US set to release 50mn barrels of oil to ease energy costs

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Oil prices steadied near $80 a barrel on Tuesday after the United States announced plans to release up to 50 million barrels of oil from its reserves to cool the market,according to findings by Persecondnews.com

The Biden administration has argued that the supply of oil has not kept pace with demand as the global economy emerged from the pandemic, and the reserve is the right tool to help ease the problem.

Americans used an average of 20.7 million barrels a day during September, according to the Energy Information Administration. That means that the release nearly equals about two-and-a-half days of additional supply.

The decision comes after weeks of diplomatic negotiations and the release will be taken in parallel with other nations. Japan and South Korea are also participating.

Persecondnews.com, gathered that Brent crude futures were down 12 cents, or 0.15%, at $79.58 a barrel by 1304 GMT after earlier dropping as low as $78.55. U.S. West Texas Intermediate (WTI) crude futures were down 50 cents, or 0.65%, at $76.25.

Although the 50 million barrel release by the United States was above market expectations, 18 million barrels had already had already been planned for sale, said UBS analyst Giovanni Staunovo.

“Big headline number but the details provide a less strong narrative,” Staunovo said.

“SPR releases are a tool used to cover temporary production disruptions and are not useful to fix imbalances caused by lack of investment and still rising demand.”

The OPEC+ alliance between the Organization of the Petroleum Exporting Countries OPEC and allies including Russia has so far rebuffed repeated requests from Washington to pump more oil.

The United Arab Emirates Energy Minister Suhail Al-Mazrouei on Tuesday said that the UAE sees “no logic” in increasing its own contributions to global markets at the moment, adding that technical data gathered ahead of an upcoming OPEC+ meeting in December pointed to an oil surplus in the first quarter of 2022.

 

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