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Effectiveness of joint reserve release

Oil edges higher as investors skeptical

Reuters . Tokyo
25 Nov 2021 00:00:00 | Update: 25 Nov 2021 05:03:49
Oil edges higher as investors skeptical

Oil prices edged higher on Wednesday, extending gains from the previous day, as investors remained skeptical about the effectiveness of a US-led release of oil from strategic reserves and turned their focus to the next step by oil producers.

Brent crude futures rose 13 cents, or 0.2 per cent, to $82.44 a barrel by 0742 GMT, having risen 3.3 per cent on Tuesday.

US West Texas Intermediate (WTI) crude futures increased 20 cents, or 0.3 per cent, to $78.70 a barrel, following a 2.3 per cent gain in the previous day.

“Investors were disappointed by the small size of the joint oil release by the United States and other countries,” said

Satoru Yoshida, a commodity analyst with Rakuten Securities.

“Also, the coordinated efforts by oil consuming countries raised fears that OPEC+ may slow their output increase pace,” he said, adding that market’s

attention is now turned toward the

next OPEC+ producer group meeting on Dec. 2.

The United States said on Tuesday 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 OPEC+ producers repeatedly ignored calls for more crude.

Japan will release “a few hundred thousand kilolitres” of oil from its national reserve, but the timing of the sale has not been decided, industry minister Koichi Hagiuda said on Wednesday. The Nikkei newspaper reported Japan will hold auctions for about 4.2 million barrels of oil out of its national stockpile by the end of this year.

Analysts said the effect on prices of the coordinated release was likely to be short-lived after years of declining investment and a strong global recovery from the COVID-19 pandemic.

The coordinated release may add about 70 million to 80 million barrels of crude supply, smaller than the more-than-100 million barrels the market has been pricing in, analysts at Goldman Sachs said.

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