As the US announces plans to sell 26 million barrels of crude, oil futures fall.
Following the announcement that the US government will move on with its plan to sell an additional 26 million barrels of crude oil from the Strategic Petroleum Reserve, oil futures prices fell on Tuesday. In order to honor its promise to Congress to sell the crude oil from the SPR this year, the US Energy Department issued a “notice of sale” on Monday.
Mandatory Sales to Fund Congress/strong>/p>
The required sales, according to StoneX’s Kansas City energy team, were planned years in advance to collect money for Congress. The team said that there will be less crude oil available for sale from the SPR following the major sales in 2022.
Additional 26 million Barrels to Flood the Market/p>
Despite rumors that the Biden administration would postpone the 2023 sales because of low reserve levels, the market will now get an extra 26 million barrels from US oil reserves. According to Ricardo Evangelista, senior analyst at ActivTrades, this led to quick price decreases after the news.
OPEC predicts an increase in global oil demand
OPEC increased its prediction for this year’s rise in global oil demand by 100,000 barrels per day, bringing it to 2.3 million barrels per day, in its monthly report. For the week ending February 10, S&P Global Commodity Insights surveyed analysts, who on average forecast supply increases of 600,000 barrels for commercial crude and 1.6 million barrels for gasoline. Distillate stockpiles are forecasted to fall by 100,000 barrels.