The US is currently considering taking out 180 million barrels of oil from its strategic reserves to stop the rise in oil prices. If this happens, it will be the largest use of strategic reserves in the last 50 years.
Accordingly, WTI fell $6, but continued to hold above $100 per barrel.
Ever since the US imposed sanctions on Moscow, oil deliveries have declined globally. According to S&P Global Vice Chairman Daniel Yergin, there is a high chance that exports will be redirected to Asia, especially since Europe seeks to minimize the consumption of Russian oil. Of course, this will be problematic both for former importers and for Russia.
Currently, Russian oil accounts for almost 30% of all oil imports to the continent and 51% of oil product imports to Europe.
However, with all the sanctions and bans from the US and UK, Russian oil is being sold at a deep discount at surprisingly low prices, making it more attractive to major oil importers in Asia, including India and China.
India is a particularly good example as it does not usually import much oil from Russia. But given the rising prices, a country that consumes 85% of its oil through imports is understandably looking for a good deal.
Going back to the US, the Energy Information Administration (EIA) reported a decrease in crude oil inventories by 3.4 million barrels during the reporting week. Gasoline inventories, on the other hand, rose 800,000 barrels, most likely due to the increase in production to an average of 9.1 million bpd last week. The EIA also said that stocks of medium distillates jumped by 1.4 million barrels per week, while production averaged 5.1 million barrels per day.
But despite increased fuel production, US gas station prices remain sky-high. Some Democratic lawmakers blame the oil industry for high prices, while the industry counters by explaining that the oil market is a global market and price setting is not the responsibility of one country.
Speaking of pricing, OPEC is meeting today to discuss its production policy. Everyone hopes that there will be no surprises, and that the the cartel will ramp up its monthly production by 400,000 bpd.
