Through Julia Fanzères to 22/11/2021

(Bloomberg) – Oil has advanced amid speculation that OPEC and its allies may not add as much supply to the market as expected if the United States releases crude reserves in coordination with other countries .

Futures closed 1.1% higher in New York on Monday. The OPEC + producer group may adjust its plans to increase crude production if consuming countries proceed with a coordinated release. Delegates said even the modest increase in production they forecast could now be reassessed when the group meets next week.

President Joe Biden is preparing to announce a release of oil from the country’s strategic oil reserve along with several other countries as early as Tuesday, according to people familiar with the plan. The move, likely in collaboration with India, Japan and South Korea, would be an unprecedented effort by major oil consumers to contain soaring energy prices.

“The battle lines are being drawn,” said John Kilduff, founding partner of Again Capital LLC. “Certainly OPEC and the Saudis can win as long as they hold all the cards. They can keep more oil on the market than an SPR version can put on the market. If you see WTI going below $ 70, then I would expect a response from OPEC +. “

Oil fell from a high in late October as speculation grew that the United States and other countries would release reserves. Meanwhile, the return of virus restrictions in Europe suggests there could still be a threat to global energy demand due to a Covid-19 resurgence.

Biden has been talking for several weeks about a possible release of the strategic oil reserve. The situation remains fluctuating and plans could change, but the United States is considering an output of more than 35 million barrels over time, according to one of the people. The pending announcement was described by people who requested anonymity before official statements.

Meanwhile, some OPEC + countries are unhappy with the use of state reserves, designed to be deployed in emergencies, to cool this year’s price hike, delegates said, declining to be identified because discussions are private. The Saudi-Russian-led OPEC + is meeting next week to discuss plans to increase production by an additional 400,000 barrels per day in December.

Prices:

• West Texas Intermediate for January delivery rose 81 cents to $ 76.75 a barrel in New York
• Brent for January settlement added 81 cents to end the session at $ 79.70 a barrel

India has yet to decide when and how much to release emergency oil stocks and a decision will be a coordinated step with other major consumers, according to government officials with first-hand knowledge of the matter.

Japan’s oil storage law does not allow the sale of reserves due to high prices, but the government and the private sector currently hold more reserves than the minimum required by law, according to an article published this weekend in the Yomiuri newspaper, which cited government sources.

Tokyo has determined that it can use its stocks legally as long as it exploits the oversupply, according to a TV Asahi report, which quotes an unidentified government official. He did not provide further details on how much oil would be released.

Elsewhere, stocks in Cushing, Oklahoma, the delivery point for benchmark US crude futures, rose about 344,000 barrels last week, traders said, citing data from Wood Mackenzie. The so-called prompt-spread weakened to trade at 63 cents per barrel.