Oil prices close stable due to investors’ doubts about the release of reserves

The oil prices closed stable on Wednesday as investors questioned the effectiveness of the release of strategic crude oil reserves by USA and they focused on the response of the producers.

The Brent crude fell 6 cents, or 0.07%, to $ 82.25 a barrel, while US crude futures West Texas Intermediate (WTI) lost 11 cents, or 0.14%, to $ 78.39.

The United States said it would release millions of barrels of oil from strategic reserves in coordination with China, India, South Korea, Japan and Britain to try to cool prices after the OPEC + ignored their requests to pump more.

Japan will release “a few hundred thousand kiloliters” of oil from its national reserve, but the timing has not been decided, its Industry Minister Koichi Hagiuda said on Wednesday.

The director of the International Energy Agency (IEA) said on Wednesday that some countries have not taken a helpful position on oil and gas prices, and that not enough supply is reaching consumers.

Analysts said the effect on prices is likely to be short-lived, after years of declining investments and a strong global recovery from the Covid-19 pandemic.

According to analysts Goldman Sachs, the coordinated release could add between 70 million and 80 million barrels of crude supply, a figure lower than the more than 100 million barrels that the market has been calculating.

“According to our pricing model, that release would be worth less than $ 2 a barrel, far less than the $ 8-a-barrel decline since late October,” the bank said in a note titled “A drop in the ocean“.

JPMorgan Global Commodities Research He said that any impact on oil prices from the release of crude could not be sustained for long. The brokerage also expects global oil demand to exceed 2019 levels in March 2022.

Although attention has now turned to how the Organization of the Petroleum Exporting Countries and its allies (OPEC +) to the joint release of reserves, sources said the group was not discussing a pause in increased oil production for now.

The group will hold two meetings next week to set its production policy, according to sources.

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