The effect of curbing oil prices is uncertain, and the United States urges Russia to increase production and wait for OPEC+ to act

At the beginning of the Asian market on Friday (November 26), U.
S.
crude oil weakened slightly, falling as much as 1.
5% to a three-day low of $77.
23 / barrel
.
Currently trading around 77.
43, crude oil prices were largely stable on Thursday (Nov.
25) as U.
S.
traders took a holiday, after the Organization of the Petroleum Exporting Countries (OPEC) said that the planned coordinated release of reserves could exacerbate the oil glut expected early next year, and the market will wait for next week's OPEC+ meeting
during the US Thanksgiving.

Intraday attention: Due to the Thanksgiving holiday, the New York Stock Exchange closed early at 02:00 Beijing time on November 27; ICE's Brent crude oil contract trading ended at 03:00 Beijing time on the 27th; CME's precious metals and US crude oil contract trading ended at 02:45 Beijing time on the 27th, and its foreign exchange contract trading ended
at 02:15 Beijing time on the 27th.

Negative factors affecting oil prices

[U.
S.
to sell 32 million barrels of strategic reserve crude oil to lower oil prices]

According to foreign media reports on the 25th, the US Department of Energy said a few days ago that the United States will release 32 million barrels of crude oil from four strategic oil reserves for auction sale, and it is expected to be delivered
.

According to reports, the crude oil came from 4 reserves in Texas and Louisiana, mainly sour crude.

The sale is expected to lower U.
S.
crude prices
.
Delivery will take place between the end of December and April 2022, and the buyer must return
between 2022 and 2024.

[U.
S.
is trying to persuade Russia to increase oil production to curb oil prices]

The Interfax news agency (IFAX) on Thursday quoted the Russian Foreign Ministry as saying that the United States is trying to persuade Russia to increase oil production in order to lower global oil prices
.

In addition, the Iraqi Oil Ministry said that the Organization of the Petroleum Exporting Countries (OPEC) has been quite cautious about output and reducing supply, a strategy that has been quite successful, and OPEC does not want to lose such success because the oil market is still quite fragile and any additional supply may lead to price collapse or oversupply
.

[Japanese experts believe that the effect of releasing oil reserves remains to be seen]

Japan announced on November 24 that it would cooperate with the United States' action to release the Strategic Petroleum Reserve to stabilize oil prices, and release the country's excess oil reserves
without violating the Oil Reserve Law.
Japanese experts believe that the effect of the joint release of oil reserves by many countries remains to be seen
.

According to reports, the Japanese government expects to release 4.
2 million barrels first, which is equivalent to Japan's domestic demand for 1 to 2 days, and may continue to release additional amounts
as needed.

Ken Koyama, chief researcher at the Japan Institute of Energy Economics, believes that Japan has released only excess reserves and the amount released is limited
.
From the perspective of increasing supply, it is difficult to judge
the effect of this joint release of oil reserves.

As investors are worried that the release of reserves by major consumer countries will trigger a counterattack from oil producers, after the Japanese government officially stated its position on the 24th, oil prices on the Tokyo Commodity Exchange did not fall but rose, and the price of crude oil futures produced in the Middle East rose
significantly.

Suzuki Kan, a professor at the Faculty of Economics at Gakushuin University in Japan, said that this can be considered as an opportunity to establish a normalization mechanism, and countries can significantly increase oil reserves and jointly release
them when oil prices soar.
As long as reserves are sufficient, mere signals of the possibility of releasing oil reserves can help stabilize oil prices
.

[UK suspends inbound flights from several African countries]

On the evening of November 25, local time, British Health Secretary Javid announced that from 12 o'clock on the 26th, the UK will put 6 African countries on the red list, and at the same time suspend flights from these countries into the UK
.

The six countries are South Africa, Namibia, Zimbabwe, Botswana, Lesotho and Eswatini
.

Javid said scientists are "deeply concerned" about the new coronavirus variant B.
1.
1.
529, but more research
is needed on it.
This variant has a large number of mutations and is likely to be more contagious
.

Factors affecting oil prices

[Increased winter demand may sustain high oil prices]

Winter has entered in the Northern Hemisphere and energy demand has increased
.
High oil prices are likely to continue
if supply and demand are not moderated by new factors, such as a further expansion of reserves releases from major consuming countries or increased production in oil-producing countries.

OPEC and its allies will meet
next week.
Some OPEC representatives warned this week that releasing strategic reserves could allow the group to cancel a production increase scheduled for January
.
The International Energy Agency (IEA) accused Saudi Arabia, Russia and other major energy producers of creating "artificial tensions" in global oil and gas markets, urging OPEC+ to accelerate the recovery of supply; ANZ said the alliance would pause production increases to provide a buffer
against demand-side headwinds.

[UAE says there is no 'preset position' ahead of OPEC+ oil meeting]

The UAE said it would not preset a position on the OPEC+ oil production strategy before next week's meeting, an alliance of major OPEC+ oil producers, and state media tweeted to quote the Energy Department as saying, "The UAE remains fully embracing and has no preset position
on the next meeting.
" The country reiterated that any decision would be taken
collectively.
”

The comments come as traders and analysts debate whether OPEC+ will react to
the release of its strategic reserves of crude by pausing or interrupting monthly production increases.
OPEC+, led by Saudi Arabia and Russia, will meet
on December 2.
Kuwait, another important member of OPEC+, also expressed its full support for OPEC+'s "declaration of cooperation.
"

JPMorgan said OPEC+ could pause production
increases in the first quarter of next year given the release of the Strategic Petroleum Reserve and the surge in coronavirus cases in Europe.

JPMorgan analysts such as Natasha Kaneva said that "the expected size of the Strategic Petroleum Reserve release, combined with the weakening of the physical market due to the European lockdown, further reduces the need
for OPEC+ to act.
" ”

"We already expect the global oil market to enter a state of oversupply throughout the first half of 2022 and do not expect OPEC+ to intervene
during January-March.
" Banks, including Citi, disagree, expect the group to opt for policy continuity and boost production by 400,000 bpd
in January.

In general, although the United States and many countries released crude oil reserves, their impact on curbing the rise in oil prices is limited, but it is necessary to pay attention to the short-term impact of the epidemic in Europe on oil prices; In addition, due to the light trading during Thanksgiving and the approach of the weekend, investors may pay more attention to next week's OPEC+ meeting
.

At 8:12 Beijing time, U.
S.
crude oil is now at $77.
43 per barrel
.