Through Jake Lloyd Smith On 17-11-2021
(Bloomberg) — Oil fell as investors weighed the odds that the Biden administration could tap emergency reserves in a coordinated move with countries like China, and a mixed report on US inventories.
West Texas Intermediate fell 0.6% after easing on Tuesday. President Joe Biden has weighed the benefits of releasing oil from the Strategic Petroleum Reserve to try to push gasoline prices down. A release by China was put forward by the US during this week’s virtual summit with President Xi Jinping, the South China Morning Post reported, citing an unidentified person. Beijing is open to the request but has not committed to specific actions, it said.
The Xi-Biden summit lasted 3 1/2 hours and covered a wide range of topics, including energy security. The US’s request for China to release oil reserves was part of talks over economic cooperation, the South China Morning Post reported. The matter was also discussed during an earlier phone call between Chinese Foreign Minister Wang Yi and US Secretary of State Antony Blinken, it said.
In the US, crude oil in Cushing’s tanks — the Oklahoma delivery point for WTI futures — has sunk to a three-year low after falling in the past five weeks, according to official data from the Energy Information Administration.
The industry-funded American Petroleum Institute reported that nationwide crude oil inventories jumped 655,000 barrels last week, according to people familiar with the data. However, the report also showed a decline in oil at the Cushing hub, as well as lower gasoline inventories. Official figures will come later on Wednesday.
After hitting its seven-year high last month, crude oil has declined, with traders trying to figure out the likely trajectory of the market in 2022. The International Energy Agency said this week that while demand growth remains robust, supply is catching up. Meanwhile, the Organization of the Petroleum Exporting Countries said there could soon be a surplus as the recovery from the pandemic falters.
- The WTI for December delivery fell 0.6% to $80.30 a barrel on the New York Mercantile Exchange at 9:09 am in Singapore.
- Brent for January settlement lost 0.5% to $82.06 a barrel on the ICE Futures Europe exchange.
The oil market remains retarded, a bullish pattern characterized by short-term prices being more expensive than longer-term. Brent’s fast spread was $1.01 a barrel in backwardation on Tuesday, little change from Monday’s level.