Oil sags as traders assess potential for joint stockpile release
BNN Bloomberg
Oil retreated as investors weighed the chances of the U.S. and China tapping their strategic reserves, and an industry report showed an increase in American stockpiles.
Oil retreated as investors weighed the chances of the U.S. and China tapping their strategic reserves, and an industry report showed an increase in American stockpiles.
West Texas Intermediate crude declined 1.2 per cent. During a virtual summit this week, the U.S. asked China to release oil reserves, the South China Morning Post reported. Beijing is open to the request but hasn’t committed to specific actions, it said. President Joe Biden is seeking to quell discontent over rising fuel costs.
Japan, another major consumer that has voiced concern about high prices, is unlikely to release oil from its reserves due to a law that only allows it to release stocks in the event of supply disruptions, a government official said.
The push for releases from oil reserves come as physical markets in Asia remain strong. Spot differentials for grades such as Russia’s ESPO and Qatar’s Al-Shaheen this week both traded at higher levels than a month ago.
Crude has drifted in range of about US$7 for the last six weeks, and traders are trying to figure out the market’s likely trajectory into 2022. The International Energy Agency said this week that while demand growth remains robust, supply is catching up. Meanwhile, the Organization of Petroleum Exporting Countries said a surplus may soon emerge as the rebound from the pandemic falters.
