Crude Oil Daily: Biden's new measures have limited short-term impact on oil prices

Oil prices recovered slightly on October 19
.
Yesterday, Biden issued a speech on gasoline, announcing three new measures
on oil prices.

First, the DOE will sell 15 million barrels of strategic reserve crude oil stocks in December to complete the 180 million barrels strategic stockpile launch announced
in March.
If there is a supply disruption due to Russian or other crude oil in winter, additional stocks
will be added.
Comments: The 15 million barrels released in December are unfinished parts of the original plan, and there is essentially no additional increase, so the short-term impact is small
.
However, you need to pay attention to whether there will be additional delivery
in the future.

Second, the government plans to make strategic inventory buybacks
when crude oil prices fall below $67-72/bbl.
The Department of Energy is working on rules that could lock forward purchase contracts through fixed-price bidding to encourage oil companies to ramp up crude oil production
immediately.
Comments: The actual delivery time of repurchased inventories is after 2024 to 2025, so the short-term boost to crude oil production is limited
.

Again, call on U.
S.
oil companies to benefit consumers
.
Reduce refinery gasoline production margins and traders' retail profits
above historical averages.
Oil companies are also required to reduce dividends and share buybacks to investors and instead use profits for investment and production
.
Comments: It is difficult
to ask oil companies to consciously make profits.
Follow-up needs to pay attention to whether the policy of banning the export of gasoline and diesel promoted by Biden in the near future can be implemented, and the probability of implementation before the mid-term elections is unlikely
.

Overall, since Biden had already predicted that new measures would be announced this week, the market was somewhat ahead of expectations
.
Crude oil prices fell briefly before Tuesday's specific plan was announced, but recovered slightly after the official announcement on Wednesday, possibly due to an assessment
of the lack of substance in the new measures.
The above three measures alone have little impact on short-term oil price sentiment and supply and demand, but it is necessary to pay attention to the possibility of more measures in the future and the additional impact
on oil prices at that time.