Still, both barrels registered their largest quarterly percentage gains since the second quarter of 2020.
US President Joe Biden announced on Thursday the release of a million barrels of oil a day for the next six months from the US Strategic Petroleum Reserve to try to lower gasoline prices.
“This is a market where every barrel counts and it is a significant volume of oil that will be put on the market over an extended period of time,” John Kilduff, a partner at Again Capital LLC, said before the announcement.
If the gigantic release of emergency reserves actually takes place, the oil market would no longer be short of supplies in the second quarter, and even be oversupplied in the third according to current forecasts by the International Energy Agency (IEA), analysts at Commerzbank said. .
A release of oil reserves is also a sign that Washington does not expect a quick resolution to the crisis in Ukraine, which has limited oil supplies, said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“Desperate times clearly call for desperate measures, and it is clear that the Biden Administration believes that rising oil prices justify this move to consume the country’s emergency supplies,” Streeter said.
Analysts at Goldman Sachs said the move would help rebalance the oil market in 2022, but it was not a permanent solution.
“This would still be, however, a release of oil inventories and not a persistent source of supply for the coming years. Therefore, this release would not resolve the structural supply deficit, which has been going on for years,” they said.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, agreed at a meeting on Thursday to uphold their current deal and raise their May output target by 432,000 barrels per day (bpd).
Source: Ambito
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