MOSCOW (MRC) -- Crude oil futures were higher in mid-morning trade in Asia Nov. 24, extending gains of more than 3% overnight, after major oil-consuming economies announced a smaller-than-expected release from their strategic petroleum reserves, reported S&P Global.
Some bearish pressures also came from an unexpected build in US crude oil and gasoline inventories last week.
At 10:23 am Singapore time (0223 GMT), the ICE January Brent futures contract was up 14 cents/b (0.17%) from the previous close at USD82.45/b, while the NYMEX January light sweet crude contract was 25 cents/b (0.32%) higher at USD78.75/b.
Oil prices continued to climb after settling 2.3%-3.3% higher overnight as investors deemed the scale of the SPR releases by several major oil-consuming economies insufficient to offset the current shortage of oil the world faces.
"Markets deemed the overall release of the strategic oil reserves to be too small to ease the demand-supply imbalance," IG market strategist Yeap Jun Rong said.
The US will release 50 million barrels from its SPR by early next year, though a portion of that has to be returned by 2025, while India will release 5 million barrels and the UK will allow companies to voluntarily release 1.5 million barrels.
South Korea also said Nov. 24 that it will release crude oil from its SPR, though it did not specify the timing and volume to be released.
A source at South Korea's energy ministry said the country could possibly release about 4% of the country's SPR, equivalent to around 3.8 million barrels, as it did in 2011 during the Libyan crisis.
The announced figures will do little to calm nerves about soaring energy costs and the associated rise in inflation. Despite declines in the last four weeks, crude prices remain not far from the seven-year highs touched in late October.
In the US, drivers are now facing the highest Thanksgiving gasoline prices in nine years as of Nov. 23.
Media reports indicate the American Petroleum Institute has reported a build in US crude oil and gasoline inventories for the week ended Nov. 19, with crude stocks rising 2.3 million barrels in the week and gasoline inventories up 600,000 barrels.
As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.
We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.
We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, EIA said in a monthly report earlier this year, a smaller decline than its previous forecast for a drop of 210,000 bpd.