International oil prices hit a new high in more than two weeks, the White House’s idea may "treat the symptoms but not the root cause"

On Wednesday (November 10), international oil prices rose, continuing the strong gains of the previous three trading days. Previous industry data showed that crude oil inventories in the United States unexpectedly fell last week. At the same time, with the relaxation of epidemic restrictions, tourism demand has also rebounded recently.

GMT+8 16:32, NYMEX crude oil futures rose 0.17% to 84.29 US dollars per barrel; ICE Brent crude oil futures rose 0.52% to 85.24 US dollars per barrel. Both cities refreshed their highs since October 25, reaching US$84.97/barrel and US$85.50/barrel respectively.


In the past few months, the tightening of global oil inventories has supported strong crude oil prices. The latest data from the American Petroleum Institute (API) shows that as of the week of November 5, crude oil inventories fell by 2.485 million barrels, and analysts previously estimated an increase of 1.9 million barrels.

The U.S. Energy Information Administration (EIA) previously announced a short-term energy outlook report that predicts that gasoline prices will fall in the next few months. Federal Bank analyst Vivek Dhar said in a report: "The EIA report...really suppresses concerns that the United States will release oil from its Strategic Petroleum Reserve (SPR)."

But Howie Lee, an economist at OCBC Bank in Singapore, said: “I would be surprised if they don’t release their reserves. Inflation is higher than they expected. I don’t think they want oil prices to further aggravate upward pressure on prices.”

In the context of the recent surge in gasoline prices, US President Biden is considering whether to release strategic oil reserves. The official weekly EIA inventory data will be released at 23:30 GMT+8, which will verify the view of whether the supply is still limited.

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) recently reached an agreement to maintain the current agreement to increase production by 400,000 barrels per day. Avtar Sandu, senior commodity manager at Phillip Futures in Singapore, said: “As OPEC+ insists on its position, supply continues to be tight.”

He added that increasing air travel is also supporting oil demand. “Oil prices maintain a bull market pattern. The bulls may take a break, but as long as there are new positive stimuli, they will definitely launch a new offensive.”

At present, US oil production is about 11.5 million barrels per day, which is lower than the historical peak of nearly 13 million barrels per day set at the end of 2019. Some companies reduce drilling activities, hoping to use more revenue to write down debt and return cash to shareholders. Therefore, even if the White House decides to release strategic reserves, it will only have a short-term impact on the market, because doing so will not increase U.S. oil production capacity.

Russell Hardy, CEO of the trading giant Vidor, said on Tuesday (November 9) that crude oil demand has returned to pre-epidemic levels, and the first quarter of 2022 may see demand exceed 2019 levels, which further consolidates the market's still tight market. the opinion of. Hardy said: "The possibility of soaring to $100 per barrel clearly exists."