Oil prices edged higher on Friday as investors digested the possible impact of emergency reserve sales after reports that the US encouraged some major oil consumers, such as China and Japan, to consider a coordinated release of oil stocks to deflate prices.
International benchmark Brent crude was trading at $82.06 per barrel at 0635 GMT for a 1% gain after closing the previous session at $81.24 a barrel.
American benchmark West Texas Intermediate (WTI) was at $79.16 per barrel at the same time for a 0.95% rise after trade ended at $78.41 a barrel in the previous session.
The US administration’s move came after President Joe Biden said he would use all tools at its disposal, including the release of oil from his country’s Strategic Petroleum Reserve (SPR) and applying export bans.
Biden had forced the OPEC+ group on several occasions to increase production to bring down gasoline fuel prices. However, the group rebuffed his requests and chose to stick to its scheduled output rise.
The move drew widespread criticism, especially as it came shortly after COP26, the United Nations climate conference in Scotland, where world leaders were expected to move towards combating global warming and decreasing fossil-fuel investment and usage.
Releasing oil from the SPR is now a hot topic in the country following Biden’s recent pressure on countries like China and Japan to sell oil from their emergency reserves.
China has already been tapping its reserves since September to ease the pressure of high feedstock costs on domestic refiners.
According to data from US-based digital oil analytics firm OilX, in addition to the scheduled oil reserve sales, the country can only realize an incremental draw of 20 million barrels or around 400,000 barrels per day of oil. OilX predicts that this will have a limited effect on global crude balances, especially while the Energy Information Administration (EIA) and OPEC forecast a supply build in the first quarter of 2022.
By Sibel Morrow