Oil Mixed As Washington Declares Another SPR Sale

Meanwhile, mixed signals emerge from the EU's attempt to impose Russian sanctions: File Image/Pixabay

Another Strategic Petroleum Reserve sale announced by the U.S. seemed to have a calming effect on traders despite previous SPR sales doing nothing to tame prices at the pump, and on Tuesday West Texas Intermediate fell to its lowest level in nearly a week.

After the Department of Energy announced an offer to sell up to 40.1 million barrels of crude as part of the strategy to release in stages 1 million barrels of oil per day for six months, WTI fell 52 cents to settle at $109.77 per barrel.

Brent rose 14 cents to $113.56 per barrel.

Alex Kuptsikevich, senior market analyst at FxPro, said, “Movements in oil have become more subdued [and] it will take a meaningful, bullish driver for quotes to manage to consolidate above this area this time.”

Also on Tuesday, while many members of the analytical community have maintained hope that the Organization of the Petroleum Exporting Countries (OPEC) could provide relief to severely constrained global supply, prince Faisal bin Farhan, foreign minister for Saudi Arabia, said there’s nothing more the kingdom can do to tame oil markets.

He remarked, “There is enough energy in the market; we have to be sure that while we transition to a renewable future, there is enough energy in the market….the kingdom has done what it can.”

Faisal added, “Our assessment is that actually oil supply right now is relatively in balance”; earlier this month the Saudi energy minister blamed a refining crunch for soaring fuel prices.

Still, the consensus is that supplies are strained, and demand remains huge: U.S. crude oil and gasoline inventories likely fell last week, according to an extended Reuters poll released ahead of government data due on Wednesday; additionally, travel during the upcoming U.S. Memorial Day weekend is expected to be the busiest in two years.

Social justice as it related to the oil market also seemed to be in jeopardy on Tuesday as Bloomberg reported that agreement on the European Union’s proposed embargo on Russian oil “seems unlikely to move ahead during next week’s leaders summit in Brussels” and “doesn’t seem to be in the cards before next month, as we’re told Budapest’s position appears to be hardening.”

This directly contracted Germany’s economic minister, who on Monday stated that the embargo is likely to be agreed to “within days.”