Oil Closes Mixed as Market Weighs SPR Release

By Adedapo Adesanya

Crude oil prices were mixed on Monday, with the Brent losing 12 cents or 0.15 per cent to trade at $82.05 per barrel and the West Texas Intermediate (WTI) crude rising by 9 cents or 0.11 per cent to sell at $80.88 per barrel.

The market continues to weigh the likelihood that American President Joe Biden’s administration will release oil from the US Strategic Petroleum Reserve (SPR).

He is also facing calls from others in his camp like the Senate Majority Leader, Mr Chuck Schumer, to release oil from the reserve in order to bring retail fuel prices down ahead of the holidays.

“We’re here today because we need immediate relief at the gas pump and the place to look is the Strategic Petroleum Reserve,” Mr Schumer told media.

This is coming after a group of Democratic Senators wrote a letter to President Biden urging him to ban exports of crude as a way of reducing prices at the pump.

Also weighing on prices was the strengthening of the US Dollar which hit a 16-month high against a basket of major peers as investors worried about the global economy. A stronger greenback makes oil more expensive for buyers using other currencies.

This is a ripple effect of data that showed US consumer prices rose to their fastest annual pace in October since 1990. This cast doubt on the Federal Reserve’s view that price pressures will be transitory and fuelled speculation among investors that interest rates will be lifted sooner than previously thought.

The market is now taking off its mind from the current supply tightness and has now shifted its attention to the possibility of more oil supply sources and more COVID-19 cases just as demand seems to be easing.

The Organisation of the Petroleum Exporting Countries (OPEC) last week cut its world oil demand forecast for the fourth quarter by 330,000 barrels per day from last month’s forecast, as high energy prices hampered economic recovery from the COVID-19 pandemic.

In terms of the pandemic, Europe has again become the epicentre of the virus, prompting some governments to consider re-imposing lockdowns.

Also, the largest importer of oil, China is battling the spread of its biggest outbreak caused by the Delta variant.