Having already fallen by 10% ahead of the announcement, these initiatives will do little to force prices lower, Head of Commodity Strategy with Saxo Bank Ole Hansen notes
MOSCOW, November 23. /TASS/. The sale of 50 mln barrels of oil from the US strategic inventories announced on November 23 has already been sold into the market and Brent prices lost 10% because of that. Such actions will not have a significant effect on the market, Ole Hansen, Head of Commodity Strategy with Saxo Bank, told TASS on Tuesday.
“In other words, the White House will accelerate an already known release of 18 million barrels on top of the 31 they have already sold into the market so far this year. On top of that they will be lending out 32 million barrels between January and April, and which should be returned between 2022 and 2024, potentially at a time when the oil market may be even tighter due to ESG related CAPEX restrictions,” Hansen said.
“Furthermore, OPEC+ may now decide to scale back their monthly production increases, currently running at roughly 12 million barrels per month,” the analyst said.
“Having already fallen by 10% ahead of the announcement, these initiatives will do little to force prices lower. Other initiatives such as an outright ban on US crude oil exports could be a next step, so [I] do not expect a strong bounce either,” he added.
OPEC+ ministers will discuss oil production levels for January at the meeting on December 1-2. OPEC+ expects a seasonal demand to slow down in the winter season and even a surplus oil offered during the first quarter of 2022 on the back of new lockdowns.