Oil slips on plan to exploit emergency crude reserves

An aerial view shows an Idemitsu Kosan Co. oil plant in Ichihara, east of Tokyo, Japan, Nov. 12, 2021, in this photo taken by Kyodo. Mandatory Credit Kyodo / via REUTERS

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MELBOURNE, Nov. 23 (Reuters) – Oil prices fell on Tuesday, reversing gains from the previous session, following growing talks the US, Japan and India will release crude reserves to control prices despite the threat of weakening demand as COVID-19 cases erupt in Europe.

The United States is expected to announce on Tuesday a loan of crude oil from its emergency stockpile as part of a plan it has drawn up with major Asian energy consumers to cut energy prices, said a source in the Biden administration familiar with the matter. Read more

US West Texas Intermediate (WTI) crude futures fell 58 cents, or 0.8%, to $ 76.17 a barrel at 4:23 a.m. GMT. Brent crude futures fell 42 cents, or 0.5%, to $ 79.28 a barrel.

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“US President Biden is reportedly preparing to announce a release of oil from his Strategic Oil Reserve along with several other countries …” ANZ said in a memo.

Brent and WTI both rose 1% on Monday following reports that the Organization of the Petroleum Exporting Countries (OPEC), Russia and their allies, collectively referred to as OPEC +, may adjust their plan to raise oil prices. oil production if major consuming countries release crude from their reserves or if the pandemic dampens demand.

While there is talk of a coordinated release of crude that managed to bring prices below $ 80 a barrel and an actual release is only expected to have a temporary impact, analysts are turning their attention to the potential hit. of the demand for a fourth wave of COVID-19 cases in Europe.

“As Europe, and in particular Eastern Europe, struggles to stop the spread of COVID-19, the risk of containment-type measures is significant,” said Louise Dickson, analyst at Rystad Energy.

She said demand for jet fuel and jet fuel in Europe in November is expected to drop to 7.8 million barrels per day (bpd) from 8.1 million bpd in October, although this is partly a normal decline for this time of year.

“If a new wave of lockdowns are enacted in Europe, oil prices will not be spared for the remainder of the northern hemisphere flu season,” Dickson said in emailed comments.

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Reporting by Sonali Paul and Naveen Thukral; Editing by Stephen Coates and Richard Pullin

Our Standards: Thomson Reuters Trust Principles.

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