The Strategic Petroleum Reserve Disappointed Markets Yesterday And Led To A ~4% Rally In Energy Prices
Well that didn’t work: the volumes announced to be released from the Strategic Petroleum Reserve disappointed markets yesterday and led to a ~4% rally in energy prices. Even with the addition of the oil being liquidated from a handful of Asian countries, the grand total returning to the market was less than expected. Prompt month European crude oil futures are exchanging hands over $82 per barrel, American WTI is trading around $78 this morning.
The Department of Energy published an interesting note including some details about the specifics of yesterday’s announcement.
The American Petroleum Institute estimated a 1.3 million barrel drop in national oil inventory levels last week, accompanied by the rare ‘no change’ in gasoline stocks and a tame draw-down of less than a million barrels of diesel. The DOE’s version of events will come out at its regular time today (10:30 EST).
In case you haven’t heard, retail gasoline prices are high. While it’s anticipated that many will stay home on turkey day, this year’s COVID recovery is likely to cause a 13% YOY increase in auto travelers. It will be great to see family, too bad it’ll be the most expensive to do so since 2012.
Prices are drifting lower this morning as the market adopts a ‘wait-and-see’ approach ahead of a possible response from OPEC+ following yesterday’s SPR release. The cartel is scheduled to meet next week and news surrounding the continuation, cessation, or alteration of their typical monthly increase of 400,000 barrels of oil supply will be closely watched.