Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Oil: Strategic Reserve Releases Unlikely To Move OPEC+

By Ellen R. Wald, Ph.D.CommoditiesNov 24, 2021 10:59
Oil: Strategic Reserve Releases Unlikely To Move OPEC+
By Ellen R. Wald, Ph.D.   |  Nov 24, 2021 10:59
Saved. See Saved Items.
This article has already been saved in your Saved Items

On Tuesday, Nov. 23, the Biden administration finally announced its much-discussed plans to release crude oil from the United States’ Strategic Petroleum Reserve (SPR). The release is planned in coordination with several other nations including the U.K., India, Japan, South Korea, and China.

WTI Weekly TTM
WTI Weekly TTM

Here's what traders should know about this policy and how it may impact the market.

The Details

The Biden administration announced that 50 million barrels will be released from the SPR. This is the equivalent to about two and a half days of typical U.S. oil consumption based on 2019 demand numbers.

The total size of the U.S. SPR is over 700 million barrels. 18 million of the barrels to be released were already set to be sold as part of the budget reconciliation legislation that was passed by Congress years ago at the end of President Obama’s second term.

The current action will simply speed up the planned sale of these barrels and it now should be completed by Dec. 6. An additional 32 million barrels will be released as part of an exchange scheme in which companies can purchase barrels from the SPR with the commitment to resupply the strategic reserve with comparable barrels, plus additional volumes. The resupplies are slated to occur in 2022, 2023, and 2024.

India has agreed to release 5 million barrels from its SPR, which only contains about 39 million barrels. That’s a little more than 1 day's worth of consumption for India at 2019 levels.

The U.K. plans to permit its commercial entities to release a total of 1.5 million barrels of oil equivalent to the market on a voluntary basis. Japan also intends to release oil from its stocks, but the timing and amount has not yet been announced.

China and South Korea may also participate, but SPR release decisions from those countries have not been made yet. According to an industry consultant (not an official Chinese source) China could decide to release at least 7.33 million barrels.

Market Impact

Oil prices rose after this announcement. WTI gained as much as 2.6% on Tuesday. Some analysts believe that futures prices rose because of the new commitment to sell oil to the SPR in the future. The theory is that the SPR has agreed to buy in the future, making prices rise.

Other analysts believe futures prices rose because the market had already anticipated an SPR release and maybe even anticipated a larger release from the U.S. and other countries. Some market watchers may also be expecting retaliation from OPEC+ at its next meeting (discussed in more depth below).

Even before the SPR release was set, GasBuddy predicted that consumers in the U.S. might possibly see a drop in gasoline prices of 15 to 30 cents per gallon over the next several weeks. However, it does not expect an immediate drop in gasoline prices, because gas stations are unlikely to drop prices during Thanksgiving week (this week), which is one of the busiest travel times of the year in the U.S.

OPEC+ Reaction

So far, OPEC+’s reaction to this SPR release has been muted. There is speculation that OPEC+ could “retaliate” and halt its planned 400,000 bpd monthly production increases at its next meeting, which happens to be next Thursday, Dec. 2. This was mostly due to a Bloomberg headline based on a statement from the Riyadh-based International Energy Forum (IEF).

According to reporting from S&P Global Platts, OPEC is not concerned about SPR releases from the U.S. and China. An OPEC delegate was quoted as saying:

"There are no concerns at this time about the U.S. and China releasing crude from strategic reserves because if the market were to be oversupplied, OPEC+ has the option of not increasing or reducing production.”

UAE oil minister Suhail Mazrouei said that he does not think OPEC+ is going to change its plan. “As of now, we are going to meet on the 2nd [of December, and] we will look at the facts, we will look at the volumes in the market, and we will take the decision based on those facts,” S&P Global Platts reported.

It is possible that, at its virtual meeting next week, OPEC+ will determine that a pause in output increases is appropriate. However, such a decision would likely be based on factors that OPEC+ deems most important to the market—specifically global oil stockpiles and demand from China.

The U.S. SPR release won’t likely play a role in its decision-making. If OPEC+ decides to halt its planned 400,000 bpd increase next week, the decision will serve more to bolster Biden politically than to impact prices. The Biden White House would see a public win in any ability to make OPEC+ alter its plans.

Oil: Strategic Reserve Releases Unlikely To Move OPEC+

Related Articles

Shaun Downey
Gold Breaks Down Monday   By Shaun Downey - Nov 29, 2021

Highlights for the week: Stock markets collapse Friday This causes buying of the EuroDollar Gold Fails at daily resistance Friday Gold and silver get no benefit from dollar...

Oil: Strategic Reserve Releases Unlikely To Move OPEC+

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Rahmtullah khan
Rahmtullah khan Nov 24, 2021 17:33
Saved. See Saved Items.
This comment has already been saved in your Saved Items
If anyone having trouble in trading looosing ur account try our free signails search in Teeeleeegraam: @Zahoor004
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email