Oil Edges Up as Traders Weigh Reserves Release and OPEC+ Action - Yahoo Finance

(Bloomberg) -- Oil edged up as traders weighed the chance that the U.S., China and Japan will tap national crude reserves while OPEC+ signaled it may reassess its own output increases.

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Futures in New York traded above $76 a barrel on Monday. U.S. President Joe Biden has been talking about a possible release from the Strategic Petroleum Reserve for several weeks. India is the latest consumer country to contemplate releasing stockpiles following signals by Japan and China. Meanwhile, the OPEC+ group of oil producers may adjust plans to raise production next month if consuming countries go through with a coordinated release, according to delegates.

“A coordinated response between China and the U.S. was mostly priced in, but if India, Japan, and others release reserves, oil prices could slide a little more,” said Ed Moya, senior market analyst at Oanda Corp.

Oil also was supported by stronger equities after Biden renominated Jerome Powell for a second four-year term as U.S. Federal Reserve chair.

Oil has fallen from a high in late October as speculation increased that the U.S. and other countries would release reserves. Any national sales will need to be fairly substantial to move prices further, with Goldman Sachs Group Inc. saying last week that the impact of around 100 million barrels of reserves auctions was already priced into the market. Meanwhile, the return of virus restrictions in Europe suggests there could still be a threat to global energy demand from a resurgent Covid-19.

Biden and Chinese President Xi Jinping talked about the merits of utilizing strategic reserves during their virtual summit last week. China indicated last week that it was working on another sale from its national inventories.

Some OPEC+ countries are unhappy about the use of state reserves, designed to be deployed in an emergency, to cool this year’s rally in prices, the delegates said, declining to be identified because the discussions are private. OPEC+, led by Saudi Arabia and Russia, meets next week to discuss plans to increase production by an additional 400,000 barrels a day in December.

India has yet to decide on the timing and volume of releasing emergency oil stocks and a move will be a coordinated step with other major consumers, according to government officials with direct knowledge of the matter.

Japan’s Oil Stockpiling Act doesn’t allow for the sale of reserves due to high prices, but both the government and the private sector currently hold more reserves than the minimum required under the law, according to a report over the weekend in the Yomiuri newspaper, which cited government sources.

Tokyo has determined it can use its stockpiles legally as long as it taps surplus supply, according to a TV Asahi report, which cited an unidentified government official. It didn’t provide further details on how much oil would be released.

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Oil Edges Up as Traders Weigh Reserves Release and OPEC+ Action - Yahoo Finance

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