Oil Prices Continue to Fall To Levels Not Seen In Weeks

Crude oil prices continued their slide on Tuesday, with WTI now plunging to levels not seen since before the OPEC+ meeting.

The November contract for WTI crude fell to $83.22 a barrel on Tuesday afternoon, down 2.64% from Monday. The last time WTI was this low was days before the OPEC+ meeting, when the group decided to cut 2 million barrels per day from its production targets from November.

The price drop is partly attributed to talk of releasing more barrels of US strategic oil reserves. Initial reports suggested the Biden administration could release 10 million barrels and an additional 15 million barrels from the country’s SPR. Later reports, however, clarified that the figure being discussed was part of the 180 million barrels expected to be released between March and October – previously disclosed by the Biden administration. Oil could be sold this week and would be the last tranche of 180 million barrels.

But oil markets are still concerned that the United States may release even more oil from the SPR to counter high gasoline prices ahead of the midterm elections. The United States is mandated by Congress to sell an additional 26 million barrels of crude from the SPR in fiscal year 2023, which began on October 1, sparking concerns that the United States could decide to release it at short term, rather than spreading it out over the year. .

US SPR has fallen to 405 million barrels so far this year, from 593 million barrels in inventory at the start of the year, according to official EIA data. This is the lowest amount of crude oil in the SPR inventory since June 1984.

Besides the SPR release, another factor weighing on oil prices is the lingering fear of a recession, which could undermine oil demand.

By Julianne Geiger for Oilprice.com

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