By Gina Lee
Investing.com – Oil was down Friday morning in Asia, sliding more than 1% over concerns that a U.S.-led coordinated release of crude reserves among major consumers could lead to a global supply surplus in the first quarter of 2022.
The release from the Strategic Petroleum Reserve, announced by U.S. President Joe Biden earlier in the week, will see millions of barrels of oil released in coordination with other key consuming nations, including China, India, and Japan.
The release will likely lead to a swell in supplies over the coming months, according to the findings of the Economic Commission Board (ECB) that advises the Organization of the Petroleum Exporting Countries (OPEC), an OPEC source told Reuters.
The board also expects a 400,000 barrels-per-day (bpd) surplus in December 2021, expanding to 2.3 million bpd in January 2022 and 3.7 million bpd in February if consumer nations go ahead with the release, the source added.
Forecasts of rising surplus oil are clouding the outlook of the next OPEC and allies (OPEC+) meeting on Dec. 2. The cartel will decide whether it will continue raising output by 400,000 bpd in January.
However, both Brent and WTI contracts are headed towards their first weekly gain in nearly a month. The overall volume of the crude reserve release, around 70 million to 80 million barrels, was smaller than expected.
“Since the volume is small, I think it is aimed at easing tightness in supply, rather than having a big impact on oil markets,” Petroleum Association of Japan president Tsutomu Sugimori told the media on Thursday.
Oil Falls, WTI Slips Almost 2.7%, Over Q1 Supply Glut Fears
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.