Oil Up After U.S. Announces Coordinated Reserve Release

© Reuters.

By Gina Lee – Oil was mixed Wednesday morning in Asia as investors digested a U.S.-led coordinated release of stocks from strategic reserves. They also took profits from the previous day’s rally ahead of a U.S. holiday on Thursday.

edged down 0.12% to $82.21 by 10:21 PM ET (3:21 AM GMT), while edged up 0.13% to $78.60.

The U.S. announced that it will release 50 million barrels from the Strategic Petroleum Reserve (SPR) on Tuesday. The U.K. will release 1.5 million barrels while India will release 5 million barrels. Japan will reportedly release several days’ worth of volume while South Korea will release an unspecified volume. China, the world’s top oil importer, will release at least 7.33 million barrels, according to industry consultant JLC.

This coordinated release, the first since 2011, aims to deal with gasoline prices that have soared over recent months. But the move might not be a long-term solution for a tight oil market, according to some investors.

“The threat of more supply in the short term certainly creates an artificially looser oil market for the next one-to-two-month period,” Louise Dickson, senior oil markets analyst at Rystad Energy, said in a report.

“However, the move by Biden and other leaders may just be pushing the supply issue down the timeline, as emptying out storage will put even further strain on already low oil stockpiles,” she added.

Investors’ focus is now on how the Organization of the Petroleum Exporting Countries and its allies (OPEC+) will respond to the coordinated release. The cartel will reconsider plans to add more supply at its next meeting on Dec. 2.

Meanwhile, Tuesday’s showed a build of 2.307 million barrels for the week ended Nov. 16. Forecasts prepared by predicted a draw of 950,000 barrels, while a 655,000-barrel build was reported during the previous week.

Investors now await , due later in the day.

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