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Oil futures were putting in a mixed performance Tuesday after the U.S. and other countries announced the release of crude from strategic reserves in a bid to push down soaring energy prices.
The White House said the U.S. would release 50 million barrels of crude from its Strategic Petroleum Reserve, or SPR, while China, India, South Korea and the U.K. would tap their supplies. Talk of a coordinated release has hung over the oil market in recent weeks.
“Action from the U.S. and other key consumers has been priced in by markets to a certain extent,” said Warren Patterson, head of commodities strategy at ING, in a note ahead of the announcement. He noted, however, that uncertainty had remained over the size of the increase.
Oil initially extended a decline after the White House announcement, but then trimmed or erased losses. West Texas Intermediate crude for January delivery
CL00,
CLF22,
was off 9 cents, or 0.1%, at $76.66 a barrel on the New York Mercantile Exchange. January Brent crude
BRN00,
BRNF22,
the global benchmark, was up 19 cents, or 0.2%, at $79.89 a barrel on ICE Futures Europe.
Both benchmarks have seen four straight weekly losses, ending Friday at seven-week lows.
Questions remain over the need for action, Patterson said, noting that COVID-related worries are on the rise as Europe imposes new restrictions. The move also risks a potential response from the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+. The group had rebuffed calls by President Joe Biden to accelerate output increases, and a Bloomberg report on Monday said members were prepared to rethink existing plans to gradually increase output in the event of a coordinated release of supplies from strategic reserves.
OPEC+ has been bumping up production quotas in monthly increments of 400,000 barrels a day.
“A resurgence of COVID-19 in Europe coupled with a potential release may be reason enough for the group to decide against a production hike of 400,000 barrels a day when they meet in early December,” Patterson said. “The prospect of retaliation from OPEC+ does leave the potential for further volatility in oil markets.”
