Oil stable as investors question effect of reserve release

An aerial view shows the Shibushi National Oil Storage Base in Kagoshima Prefecture, Japan, Jan. 18, 2019, in this photo taken by Kyodo. Mandatory Credit Kyodo / via REUTERS

LONDON, Nov. 24 (Reuters) – Oil prices were flat on Wednesday as investors questioned the effectiveness of a US-led release of oil from strategic reserves and focused on producer response.

Brent crude futures fell 27 cents, or 0.3%, to $ 82.04 a barrel at 10:00 GMT, after rising 3.3% on Tuesday.

US West Texas Intermediate (WTI) crude futures fell 23 cents, or 0.2%, to $ 78.27 a barrel, after gaining 2.3% the previous day.

The United States has said it will release millions of barrels of oil from strategic reserves in coordination with China, India, South Korea, Japan and Britain, in an attempt to cool prices after OPEC + ignored calls to pump more. Read more

Japan will release “a few hundred thousand kiloliters” of oil from its national reserve, but the timetable has not been decided, said its Minister of Industry Koichi Hagiuda on Wednesday.

Analysts said the effect on prices would likely be short-lived after years of declining investment and a strong global recovery from the COVID-19 pandemic. Read more

The coordinated release could add about 70 to 80 million barrels of crude supply, less than the more than 100 million barrels valued by the market, Goldman Sachs analysts said. Read more

“On our pricing model, such an exit would be worth less than $ 2 a barrel, significantly less than the $ 8 a barrel sales that have taken place since late October,” the bank said in a note titled “A Drop in the Barrel. ‘ocean’.

Attention has now shifted to how the Organization of the Petroleum Exporting Countries (OPEC), Russia and their allies, known together as OPEC +, will respond to the joint release of the reserve when they will meet on December 2 to discuss policy.

Meanwhile, US crude and gasoline inventories rose last week as distillate inventories fell, market sources said, citing figures from the American Petroleum Institute. Read more

Crude inventories rose 2.3 million barrels for the week ended Nov. 19, as analysts expected a drop of about 500,000 barrels.

Additional reporting by Yuka Obayashi; Editing by Kenneth Maxwell, Lincoln Feast and Alexander Smith

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