US Releases 50M Barrels from Strategic Petroleum Reserve
November 23, 2021
The news just broke that the US will release 50 million barrels out of the SPR. The 50 million barrels release will consist of 32 million barrels as a swap/loan over the next several months and 18 million barrels will be an accelerated release from a previously authorized release. India also announced early this morning that it will release 5 million barrels from its reserves.
I am sure more details will come out and as the market gets more of these details what was once unknown will now be known and that will help the market as it doesn’t like uncertainty. The market reaction so far seems subdued which might indicate much of this was already baked into prices. We will have to see how the rest of today’s trading goes. We also must remember that this is a holiday week and that leads to fewer traders and less activity and a few trades can really skew the price moves.
Energy market traders are anticipating a coordinated release of barrels from the United States, China, India, Japan, and South Korea. This news along with COVID-19 cases going up had the market down in early trading yesterday. But then later in the day saw OPEC + delegates say it wasn’t clear that their modest planned production increases would go ahead with other countries now considering releasing barrels from their SPRs. OPEC essentially said that if you release barrels, we will just hold back more of our barrels to offset this action. OPEC meets on December 2. OPEC+ has been adding an additional 400,000 BPD each month since August.
Analysts have been cautioning that any release of emergency barrels would affect prices for only a few weeks at best. They also caution that this has already been priced to some extent, so if it doesn’t happen price could move upward even further.