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Market News U.S. crude oil inventories unexpectedly increased, and oil prices fell slightly and remained stable at $78

U.S. crude oil inventories unexpectedly increased, and oil prices fell slightly and remained stable at $78

On November 24, U.S. oil futures closed down 0.14% and settled at US$78.39 per barrel. Earlier EIA data showed that as of the week of November 19, crude oil inventories increased by 1.017 million barrels, and oil prices fell slightly under pressure. At the same time, as the United States announced the day before that it will join forces with other countries to release its strategic oil reserves, it has temporarily come to an end. How OPEC+ acts will become the next trigger for changes in oil prices.

2021-11-25
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On Wednesday (November 24), oil futures fell slightly by 0.1%, with a settlement price of US$82.25 per barrel. Earlier EIA data showed that as of the week of November 19, crude oil inventories increased by 1.017 million barrels, and oil prices fell slightly under pressure. However, gasoline inventories fell by 603,000 barrels to the lowest level since November 2017, refined oil inventories fell by 1.968 million barrels, and the US Strategic Petroleum Reserve (SPR) inventory fell to the lowest level since June 2003, which must support oil prices.

Ed Moya, senior market analyst at Oanda Corp., said that the small increase in inventories, the expected rebound in production, and the re-emerging of the United States as an oil importer are not enough to have any effect on crude oil prices.

The United States announced on Tuesday that it would release tens of millions of barrels of oil from its strategic oil reserves and work with India, South Korea, Japan and the United Kingdom to cool oil prices. Earlier, the OPEC+ alliance formed by the Organization of Petroleum Exporting Countries (OPEC) and its allies has repeatedly ignored calls to increase crude oil supplies. Japan’s Minister of Economy, Trade and Industry Mitsuichi Hagi said on Wednesday that Japan will release hundreds of thousands of kiloliters of oil from its national reserves, but the time is yet to be determined. According to a document obtained, if 66 million barrels of crude oil are put in within two months, the excess supply in the global market will increase by 1.1 million barrels per day in January and February, reaching 2.3 million barrels per day and 3.7 million barrels per day. Barrels/day.

Goldman Sachs analysts said that the coordinated release of reserves may increase the supply of crude oil by about 70 to 80 million barrels, which is lower than the market's expectations of more than 100 million barrels. The bank stated in a report entitled "A drop in the sea" on November 23: "According to our pricing model, the impact of this scale of release will be less than US$2 per barrel, which is much lower than since the end of October. A drop of $8/barrel."

The release of strategic oil reserves has long been digested by the oil market, and oil prices have fallen by $10 from the multi-year high set in October. The focus now turns to OPEC+ and how the group will respond to this move by oil-consuming countries.

The Organization of the Petroleum Exporting Countries (OPEC) predicts that the release of strategic oil reserves by major consumer countries may greatly aggravate the oversupply situation in the global market. The OPEC advisory body, the Economic Commission Board, made this prediction. A week later, OPEC and its allies will hold a meeting to discuss whether to increase production. Some OPEC+ representatives have stated that if the reserve crude oil released by the United States and other countries causes an oversupply in the market, the increase in production originally scheduled for January may be cancelled. The Economic Commission’s forecast adds reasons for member states to lobby for the cancellation of production increases.

If they do this, it will be good for oil prices, because it may offset the efforts of the United States to cool gasoline prices to a certain extent. The geopolitical consequences of the friction between Saudi Arabia and its super allies may also make Brent crude oil fluctuate. However, OPEC+ may be reluctant to take such a provocative stance, especially when member states such as the UAE are eager to maintain friendly relations with the United States. In any case, the news of the release of strategic reserves has a very weak impact, and it seems that there is no need for retaliation. Therefore, we may see OPEC+ approve an increase of 400,000 barrels per day, and oil prices are expected to stabilize after the meeting.

International Energy Agency (IEA) Director Fatih Birol (Fatih Birol) said on Wednesday that the oil market is suffering from man-made supply gaps. He hopes that the Organization of Petroleum Exporting Countries and the oil-producing allies (OPEC+) will do more in the upcoming meeting. Measures to keep oil prices down and help reduce oil prices to a reasonable level.

(US Oil Hour Chart)
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