Oil Re-Gains Losses Seen After SPR Release
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The upward price action in crude oil the past few sessions is a big slap in the face to the unprecedented move from the International Energy Agency (IEA) and U.S. Department of Energy less than two weeks ago in releasing millions of barrels from their emergency oil stockpiles.
On June 23, the IEA and U.S. Department of Energy announced the release of a total of 60 million of barrels of oil onto the world market over the next month to offset disruptions caused by unrest in the Middle East, specifically Libya. The U.S., for its part, will release half of the total amount, or 30 million barrels, from the Strategic Petroleum Reserve (SPR). Even after the release, the Strategic Petroleum Reserve (SPR) will remain high at 697 million barrels.
The situation in Libya has caused a loss of roughly 1.5 million barrels of oil per day, mainly light, sweet crude.
After plunging nearly 5 percent the day news was announced, crude has recovered all of those losses and then some.
Today on NYMEX Light, Sweet crude (WTI) August futures closed floor trading up $1.95 to $96.89 with a day range of $97.28 to $94.34. This represents a gain of 6.4 percent from the $91.05 close on June 23rd.
Continued tension in the Middle East and this weekend's Barron's article calling for $150 oil is adding fuel to today’s rally.
Barron's said the average monthly price of oil could reach a record $150 per barrel by next spring, with spikes of $165 to $170 seen. If oil reaches this level $4.50 per gallon gas could become the norm and it could cut 1.5 percentage points off GDP, Barron’s estimates.
On June 23, the IEA and U.S. Department of Energy announced the release of a total of 60 million of barrels of oil onto the world market over the next month to offset disruptions caused by unrest in the Middle East, specifically Libya. The U.S., for its part, will release half of the total amount, or 30 million barrels, from the Strategic Petroleum Reserve (SPR). Even after the release, the Strategic Petroleum Reserve (SPR) will remain high at 697 million barrels.
The situation in Libya has caused a loss of roughly 1.5 million barrels of oil per day, mainly light, sweet crude.
After plunging nearly 5 percent the day news was announced, crude has recovered all of those losses and then some.
Today on NYMEX Light, Sweet crude (WTI) August futures closed floor trading up $1.95 to $96.89 with a day range of $97.28 to $94.34. This represents a gain of 6.4 percent from the $91.05 close on June 23rd.
Continued tension in the Middle East and this weekend's Barron's article calling for $150 oil is adding fuel to today’s rally.
Barron's said the average monthly price of oil could reach a record $150 per barrel by next spring, with spikes of $165 to $170 seen. If oil reaches this level $4.50 per gallon gas could become the norm and it could cut 1.5 percentage points off GDP, Barron’s estimates.
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