Oil Prices Dip in Early Asian Trade Due to Increased Supply
Early on Tuesday, the oil market saw a decline in prices as the U.S. government announced plans to release a significant amount of crude from its Strategic Petroleum Reserve (SPR). This, along with reports of a growing supply in the market, led to a drop in futures prices.
As of 0132 GMT, futures for oil fell by 82 cents, or 1%, to $85.79 per barrel, while futures for Brent oil fell by $1.04, or 1.3%, to $79.10 per barrel.
U.S. Department of Energy to Sell 26 Million Barrels of Oil
The U.S. Department of Energy (DOE) revealed that it will carry out a sale of 26 million barrels of oil from the SPR, as mandated by Congress in previous years. This decision came after some considerations of cancelling the sale for the fiscal year 2023, following the record 180 million barrel release by the previous administration under President Biden.
Supply Concerns Relieved by Azeri Crude Shipment and Shale Basin Increase
In addition to the SPR release, the oil market saw relief in supply concerns as a shipment of Azeri crude set sail from Turkey’s Ceyhan port on Monday. This was the first shipment since a devastating earthquake in the region on February 6th. The Ceyhan port is a crucial endpoint for pipelines carrying oil from Azerbaijan and Iraq, and it has the capacity to export about 1 million barrels per day of crude.
Furthermore, the Energy Information Administration (EIA) projected that crude oil production and output from the seven largest shale basins in the U.S. will reach record highs in March. The EIA’s monthly Drilling Productivity Report stated that crude production in these basins is expected to increase by about 75,000 barrels per day in March, reaching a total of 9.36 million barrels per day.