US Commits to Replenishing Strategic Petroleum Reserve
December 19, 2022
Supporting prices on Friday was the news that the US will buy 3 million barrels of oil for February delivery to replenish the Strategic Petroleum Reserve. However, it is not clear if purchases to fill the depleted reserve will continue or if this purchase is a one-off purchase. Over 6 months from May through October, the Biden Administration sold 1 million bpd ( 180 million barrels total) from the SPR.
Baker Hughes reported in their rig count that oil rigs were down 5 to a total of 620 oil rigs. Last year at this time the US had only 475 oil rigs online.
In its latest monthly report, OPEC revealed it had yet again failed to produce as much crude oil as it agreed to produce the last time its discussed output. This news leads many market speculators to believe that the persisting underinvestment in new oil supply may lead to structurally higher prices.
Commerzbank said it does not expect to see a visible upturn in the global economy and commodity prices until the middle of next year. It believes the current oil price weakness is short lived and sees significant price recovery in the coming months.
European Union nations’ energy ministers meet in Brussels today in a last-ditch efforts to agree on a cap for natural gas prices.