The United States or release 60 million barrels of oil reserves? The decline in oil prices may continue

On Wednesday (November 10), U.
S.
crude oil fell more than 3% from its high, on the one hand, EIA crude oil inventories continued to increase, on the other hand, the US government is trying to contain the inflation crisis, and the market is expected to release strategic reserve oil
.
In addition, the price of natural gas has fallen as Russia increases gas shipments to Europe, which also affects the trend
of oil prices.

Russia increases gas flows to Europe

Russia on Wednesday (Nov.
10) increased gas deliveries to Europe through Poland, Belarus and Ukraine, easing some concerns about tight supplies ahead of winter and pushing down wholesale prices
.

Last week's low flow to Europe and the counterflow of the Yamal-Europe pipeline — meaning gas flowing east into Poland rather than west into Germany — exacerbated supply cries in Europe, pushing up prices for industry and consumers
.

But Russia began sending gas to Germany again late Monday, following President Vladimir Putin's orders, increasing supplies to Europe and rebuilding Russian stockpiles
there after domestic tanks were replenished.

On Tuesday (November 9), Russia's state-owned gas company said it had begun refueling its European gas storage
.
Analysts say Moscow needs to do more to ease Europe's concerns, leading to a sharper drop in gas prices
.

Gas prices have risen this year due to low gas inventories, increased demand after the economic recovery since the easing of lockdowns, and tighter-than-usual supplies in Russia
.

EIA crude oil inventories increased for the third consecutive week

U.
S.
crude inventories rose by 1.
002 million barrels in the week ended Nov.
5, the third straight week of improvement and the highest level
since August, according to the EIA inventory report.
Oil prices fell
after the data was released.

Refined oil inventories fell by 2.
613 million barrels and gasoline inventories by 1.
555 million barrels
.
U.
S.
oil market supply has tightened in recent weeks as demand increases, and holiday season consumption is likely to rise
further as more international travel resumes.

Rebecca Babin, a senior energy trader at CIBC Private Wealth Management, said the market appears to be groping
in the dark about how the U.
S.
government is responding to rising energy prices.
A stronger dollar coupled with less bullish inventory data also contributed to the price decline
.

The United States is rapidly exporting strategic reserve crude oil

Although Biden has not announced the release of the Strategic Crude Oil Reserve (SPR) for the time being, the US SPR is exporting
at a record rate.
This has had a certain impact on international oil prices, but it does not seem to do much to
ease domestic oil prices in the United States.

About 1.
6 million barrels of crude oil were exported from the U.
S.
Strategic Crude Reserve in October, a monthly record
, according to market intelligence firm Klper.

Matt Smith, Klper crude oil analyst, said: "A total of 12 million barrels of crude oil has been exported from SPR in the past two months, and 3.
1 million barrels were exported last week, the most
since July 2017.
Given the current rate of SPR release, it stands to reason that more U.
S.
SPR will be exported
in the coming weeks.
”

Biden said earlier that he had asked the White House National Economic Council (NEC) to work to lower energy prices, and asked the Federal Trade Commission (FTC) to crack down on market manipulation in the energy industry to do more to reverse inflation
.

"The United States has also stepped up pressure on the oil market, with President Biden asking his economic advisers to explore ways to lower energy prices, and there is growing speculation that the United States may coordinate with other countries such as Japan to release stocks
," analysts at ANZ said in a note on Thursday.

Citi: The U.
S.
could release up to 60 million barrels of oil reserves

With an early forced sale of 20 million barrels of oil next year, the United States could release between 45 million and 60 million barrels of oil
from the Strategic Petroleum Reserve (SPR).
The move could help curb oil prices after OPEC+ decided to raise production by 400,000 b/d in December, rejecting calls from importers to speed up production
.

The short-term energy outlook released by the U.
S.
Energy Information Administration (EIA) is more accommodative, but the oil and gas market remains tight, and the possibility
of the US releasing SPR cannot be ruled out.