Oil futures traded mostly lower on Thursday, holding ground near six-week lows, as China was seen preparing to release crude from its strategic reserve and a news report said the Biden administration was pressing other oil-consuming countries to join in.
The Biden administration asked China, India and Japan to release reserves as part of a coordinated effort to push down prices, Reuters reported, citing anonymous sources.
News reports on Wednesday said that the issue of releasing reserves came up earlier this week in a virtual meeting between President Joe Biden and Chinese leader Xi Jinping. Bloomberg reported Thursday that China had taken steps to begin releasing some crude from its reserves.
“A concerted approach would certainly have a greater impact on the oil market than if the U.S. embarked on this path on its own,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note.
West Texas Intermediate crude for December delivery CL00, +0.06% CLZ21, -0.23% fell 20 cents, or 0.3%, to $78.16 a barrel on the New York Mercantile Exchange after touching an intraday low of $77.08. The December contract expires at the end of Friday’s trading session.
January Brent crude BRN00, +0.05% BRNF22, +0.05%, the global benchmark, was down 6 cents, or nearly 0.1%, at $80.22 a barrel.
The WTI and Brent crude contracts ended Wednesday’s session at their lowest settlements since early October.
Among the petroleum products traded on Nymex, December gasoline RBZ21, -0.34% shed 0.3% to $2.273 a gallon and December heating oil HOZ21, -0.14% was little changed at $2.365 a gallon.
“As far as China releasing oil from their reserve, we’ve been there and we’ve done that and it has had little impact,” Phil Flynn, senior market analyst at The Price Futures Group, wrote in a daily note. “The bigger issue, of course, is will China release in conjunction with a bigger release from the U.S. and Japan.”
The market has already see some pretty sizable releases from the U.S. Strategic Petroleum Reserve the last two weeks, he said. For the week ended Nov. 12, Wednesday’s Energy Information Administration showed oil stocks in the SPR at 606.1 million barrels, down 3.3 million from a week earlier.
“Those releases were part of a bigger predetermined release, but the size of the releases has been raising eyebrows,” said Flynn. “Is the Biden administration already starting a major SPR release? And if so, it is likely that it will backfire making oil much more expensive in the future?”
Read: Why tapping the SPR is one of many ‘bad’ options to ease gasoline prices
“There may be the opportunity over the next few weeks to bottom fish for some long-term options,” Flynn said.
On Wednesday, Biden asked Federal Trade Commission Chair Lina Khan in a letter to immediately “consider whether illegal conduct is costing families at the pump.”
“The discrepancy between the persistently high pump prices and the exchange prices for gasoline, which have been falling since late October, is clearly a thorn in Biden’s side,” Fritsch said.
Natural-gas futures traded higher Thursday, looking to recoup a small portion of Wednesdays nearly 7% drop.
The U.S. Energy Information Administration reported on Thursday that domestic supplies of natural gas rose by 26 billion cubic feet for the week ended Nov. 12. IHS Markit had forecast an increase of 24 billion cubic feet.
December natural gas NGZ21, +2.55% traded at $4.956 per million British thermal units, up 2.8%. Prices were at $4.961 shortly before the supply data.
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