On Wednesday, oil prices fell due to the US-led coordinated strategic reserve releases from global major oil consumer countries which eased the concerns over the tight supply.
By 01.22 GMT, Brent crude futures slipped by 0.4% or 32 cents to USD81.99/barrel after climbing by 3.3% on Tuesday. US WTI crude futures dipped by 0.2% or 12 cents to USD78.38/barrel, reversing out of a 2.3% gain in the previous day.
On Tuesday, the US announced its plan to release oil from its strategic petroleum reserves (SPR) in coordination with China, India, South Korea, Japan, and Britain.
The move aims to calm oil prices as the Organization of the Petroleum Exporting Countries and allies (OPEC+) have ignored their pressure for more crude output.
Japan will hold auctions for about 4.2 million barrels of oil out of its national inventories.
According to Goldman Sachs analysts, the coordinated release may add about 70 million to 80 million barrels of crude supply. The number would be significantly smaller than the more-than-100 million barrels the market has been pricing in.
Analyst Louise Dickson of Rystad Energy commented, "The threat of more supply in the short term certainly creates an artificially looser oil market for the next 1-2 month period.” Still, he added that the move might be pushing the supply issue down the timeline, as emptying out storage will put even further strain on already low oil stockpiles.
Aggravating the prices is the stockpiles situation in the US as last week, crude and gasoline stocks jumped.
According to the American Petroleum Institute figures, in the week to November 19, crude inventories soared by 2.3 million barrels, in contrast with analysts’ prediction for a drop of around 500,000 barrels. Gasoline stocks jumped by 600,000 barrels. On the other hand, distillate dropped by 1.5 million barrels.
