US Plans To Release More Crude Oil From Strategic Petroleum Reserve

Following the US’s announcement that it would release additional crude from its Strategic Petroleum Reserve (SPR) to fulfil its responsibility to Congress, oil prices fell. Although China’s recovery prospects and supply issues caused crude futures to increase by over 8% last week, the US’s plan to sell 26 million barrels of crude from its emergency reserve this year had a negative effect on oil prices. The statement also prompts worries about the weak demand brought on by the slowing of global economic expansion.

Oil Prices Affected

Brent, the benchmark for two-thirds of the world’s oil, traded 0.24% lower at $86.40 per barrel at 10.38 am UAE time, while West Texas Intermediate, the gauge that tracks US crude, was down 0.67% at $79.60 per barrel. The US Department of Energy has scheduled the delivery of crude from 1 April 2023 to 30 June 2023. Last year, a record 180 million barrels of oil were released from America’s emergency reserves after Russia’s invasion of Ukraine led to Brent crude closing in on a 14-year high of $140 a barrel.

Investors Await US Consumer Price Index Data

Investors are also anticipating data from the carefully watched US consumer price index, which measures inflation. “If inflation is scorching hot, we might see a make-or-break moment in the dollar as more [US Federal Reserve] rate hikes become priced in,” said senior market analyst Edward Moya at Oanda. The crude demand picture, according to Moya, is clinging to the possibility that the US economy would still experience a soft landing, but hot inflation data could lead to more predictions of a recession.

Impact Of Russia’s Plans

The optimism for China’s economic revival and supply concerns brought on by Russia’s plans to reduce output by 500,000 barrels per day helped crude futures rise more than 8% last week. On 5 February 2023, the G7 and the EU reached an agreement to establish the price cap at $100 per barrel for goods that trade above crude, such as diesel, and $45 per barrel for goods that trade below crude, including naphtha and fuel oil. Along with the price ceiling, the EU imposed an embargo on Russian diesel and other refined goods.

Read More – IOCL Reduces Pet Coke Prices: Outlook And Impact