Oil price above $80 after US strategic reserve release

Oil price above $80 after US strategic reserve release

/ Oil & Gas / Wednesday, 24 November 2021 12:12

Oil prices rose above $81 a barrel after the United States strategic reserves release was made together with similar moves by China, India, South Korea, Japan and Britain, according to the White House, amidst rising inflation in consumer nations.

Brent crude futures were up $1.46, or 1.83%, at $81.16 a barrel after earlier dropping as low as $78.55. U.S. West Texas Intermediate (WTI) crude futures were up $1.36, or 1.77%, at $78.11.

US will release 50 million barrels from the US Strategic Petroleum Reserves (SPR), which will start hitting the market in mid to late December.

India announced the release of 5 million barrels of oil from its strategic reserves, while South Korea and Britain also confirmed they would participate.

Reacting to the development, Andrew Lipow, president at Lipow Oil Associates said, "The market is not impressed with the Biden Administration's announcement ... because the majority of the release is actually a loan to the market and the volume that is going to be sold was already approved by Congress as part of the deficit reduction legislation," said Andrew Lipow,.

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.

Meanwhile, the United Arab Emirates energy minister Suhail Al-Mazrouei has said that the UAE saw "no logic" in increasing its own contributions to global markets at the moment, adding technical data gathered ahead of an upcoming OPEC+ meeting in December pointed to an oil surplus in the first quarter of 2022.

Prices had dropped below $80 a barrel from a three-year high of more than $86 on October 25 amid talk of a coordinated reserves release and potential hit to energy demand from a fourth wave of COVID-19 cases in Europe.

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