OPEC warned of oil gluts in response to the U.S. announcing it will release 50 million barrels of oil from the Strategic Petroleum Reserve to lower oil prices in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom. OPEC’s advisory body ahead of a meeting with OPEC+ next week predicted that the excess in markets would expand by 1.1 million barrels a day in January.
The advisory board also saw February to 2.3 million and 3.7 million a day, respectively, if 66 million barrels are injected by major consumers over the two-month period, according to a document obtained by Bloomberg. The oil markets having fallen ahead of the well telegraphed US announcement with oil down roughly 10% from recent highs has bounced since the news.
President Joe Biden has been agitating over higher oil prices blaming OPEC and US oil and gas companies for the rising energy prices. In a move that attracted much derision, prior to this SPR news President Biden in his latest shift of finding blame and solutions for high oil prices sent a letter to the FTC to consider whether “illegal conduct” by large oil and gas companies is pushing up gasoline prices for American consumers.
The redirecting by Biden and his landmark plan announced Tuesday fell short of expectations and saw oil futures prices rise. The International Energy Agency accused Saudi Arabia, Russia and other major energy producers of creating “artificial tightness” in global oil and gas markets, urging OPEC+ to react.
Citigroup Inc. in a note said OPEC+ is likely to stick to its planned increase of 400,000 barrels a day for January because reducing supply would erode the group’s claim of providing public good by stabilizing oil markets.
“The move by the six consuming nations will surely result in aftershocks as the fault lines between OPEC+ and major consuming countries become ever more visible,” said Tamas Varga, an analyst at brokerage PVM
Australia & New Zealand Banking Group, took a difference view saying OPEC will suspend the hike to provide a buffer to demand headwinds.
From The TradersCommunity US News Desk