Some analysts said the impact on prices of the coordinated release was likely to be short-lived following a fall in investment and a strong global recovery from the COVID-19 pandemic.
Oil prices fall on November 24 as US-led coordination coordinates issue of stock Strategic reserves eased concerns over tightness in global supplies, while investors profited from the previous day’s rally ahead of the US Thanksgiving holiday.
US West Texas Intermediate (WTI) crude futures fell 12 cents, or 0.2%, to $78.38 a barrel by 0122 GMT, reversing a 2.3% gain from the previous day.
Brent crude futures fell 32 cents, or 0.4%, to $81.99 a barrel, having risen 3.3% on Nov. 23.
“Coordinated efforts by oil-consuming countries to reduce crude prices prompted fresh sales,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co., Ltd.
“Behind the fall is also taking profit ahead of the US holiday,” he said, adding to concerns over slowing demand in Europe amid a resurgence in the COVID-19 pandemic.
The United States said on Wednesday that it would seek strategic cooperation in coordination with China, India, South Korea, Japan and Britain to try to cool prices after OPEC+ producers repeatedly ignored calls for more crude. Will release millions of barrels of oil from reserves.
Japan to auction off about 4.2 million barrels of oil from its national reserves Nikki The newspaper reported on 24 November.
Adding to the pressure, US crude and gasoline stocks rose last week, while distillate inventories fell, according to market sources citing data from the American Petroleum Institute on November 23.
Crude oil stocks rose 2.3 million barrels for the week ended November 19, while analysts had expected a fall of nearly 500,000 barrels. The data showed gasoline inventories increased by about 600,000 barrels and distillate stocks declined by 1.5 million barrels.
Still, some analysts said the impact on prices of the coordinated release was likely to be short-lived after years of declining investment and a strong global recovery from the COVID-19 pandemic.
Analysts at Goldman Sachs said the coordinated release could deliver about 70 million to 80 million barrels of crude, up from the 100 million barrels the market is judging.
“The threat of oversupply in the short term certainly creates an artificially weak oil market for the next 1-2 month period,” Lewis Dixon, senior oil market analyst at Rystad Energy, said in a report.
“However, by this step [U.S. President] Biden and other leaders may push the supply issue down the timeline, as depleting storage will put even more pressure on already depleted oil reserves.”
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