As the U.S. released oil from its strategic reserves, oil prices remained stable as the market resumed on Wednesday 24th November 2021.
Brent Crude futures fell by 0.3%, to $82.04 a barrel at 10:00 GMT, U.S. West Texas Intermediate (WTI) crude futures also declined by 0.2%, to $78.27 a barrel.
In conjunction with China, India, South Korea, Japan and Britain, The United States stated it would release millions of barrels of oil from strategic reserves to reduce market supply shortfall currently experienced in the oil industry.
On Wednesday, Japans Industry Minister Koichi Hagiuda stated “a few hundred thousand kilolitres” will be released from its national reserve.
Oil analysts have explained that price effect in the market was most likely to a short term event as a result of a vigorous rate of global economic recovery as well as declining investment patterns. Adding that the strategic release will increase supply by 70 million to 80 million barrels of crude.
“On our pricing model, such a release would be worth less than $2 a barrel, significantly less than the $8 a barrel sell-off that occurred since late October,” the bank said in a note with the title “A drop in the ocean”.
As pressure continues to mount on the Organization of the Petroleum Exporting Countries (OPEC) to increase supply The cartel will react to the joint reserve release when they meet on Dec. 2 to discuss policy.