An analyst predicted that oil prices will rise despite the United States and other large consumers having released millions of barrels of oil from their reserves in an effort to keep prices low.
“The effect of pumping the Strategic Oil Reserve to a group of countries that have answered US calls will simply not work,” said Stephen Schork, editor of the Shurek Report. “The SPR of any country is not meant to try to manipulate prices.”
He explained that strategic oil reserves exist only to compensate for short-term and unexpected supply disruptions.
“There are many prove that the price of a barrel of oil will go up to $ 100, “Schork said, adding that this could happen in the first quarter of next year, especially if there is a cold winter in the Northern Hemisphere, according to CNBC and was reviewed by Al Arabiya.net.
Calm oil prices
Oil prices have increased by more than 50% questyear, with a question in increased supply as more countries emerge from Covid blockades and severe restrictions imposed since last year due to the pandemic. The resumption of international travel with the reopening of more countries has increased the demand for jet fuel.
The global benchmark Brent crude exceeded the psychological resistance threshold of 80 dollars a barrel in October and prices stabilized near that level. The price of international contracts has risen close to $ 82.50.
This comes when US President Joe Biden announced Tuesday that the US will release 50 million barrels of its reserves as part of a global effort by energy-consuming countries to calm rapidly rising fuel prices. Of this total, 32 million barrels will be traded in the coming months and 18 million barrels will be an acceleration of the pre-authorized sale.
Other countries that have made this joint commitment include China, India, Japan, South Korea and the United Kingdom.
The UK has also agreed to release around 1.5 million barrels, while India has committed to five million barrels. While China, Japan and South Korea have not yet announced specific numbers.
Schork explained that what the United States announced, in addition to the estimates of the rest of the countries, will reach a total of 100 million barrels of its strategic reserves, which is equivalent to one day of world demand for crude oil.
For his part, Vivek Dar, a material analyst prime Mining and Energy at the Commonwealth Bank of Australia was more conservative in its estimates. And he predicted in a note Wednesday that the number of barrels released by the six oil-consuming countries could reach “just over 70 million barrels”, as the release of oil stocks from other countries could be “relatively weak”.
This occurs when the world consumed 97.53 million barrels of oil per day questyear, up from 92.42 million barrels per day in 2020, according to the US Energy Information Administration. In 2022, this number is set to rise to 100.88 million barrels per day.
Schork sees this as a clear sign of desperation for the success of this tool, which is the only playing card in the thrill of oil-importing countries.
“I think the market will talk about the US hoax on this and we will probably see higher prices rather than lower prices in a month,” he said.
He added that the United States should take in consider bringing American producers to the table and asking them to increase production to compensate for the supply imbalance.
Commonwealth Bank’s Dar said a rebound in oil prices on Tuesday indicated that “markets are overwhelmed by the coordinated release of strategic oil reserves.”
Comparison with OPEC +
The latest development came after OPEC and its oil-producing allies decided to stop pumping oil despite crude prices soaring to multi-year highs and US pressure to help calm the market.
Under the current production plan, the alliance will gradually increase oil production by 400,000 barrels per day every month. They are scheduled to meet again next month.
“There are still no indications that OPEC + is reconsidering its plan,” said Eurasia Group analysts. in a note dated November 22, prior to Biden’s announcement last night. They added, the large-scale release of stocks by oil consumers ahead of the OPEC + meeting could lead to a counter move by the group, leading to a “devastating confrontation.”
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