Oil margins are lowered after the largest US supply built in three weeks

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(Bloomberg) – Oil declined slightly one day after rising US stocks and the day after the announcement of a coordinated release of crude oil from strategic reserves.

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Futures in New York closed down 0.1%. A government report showed that US inventories increased by 1.02 million barrels last week. The White House on Tuesday announced the release of 50 million barrels from its reserves in coordination with the United States, China, Japan, India, the United Kingdom and South Korea.

“A small headline building, an expected increase in production, and when the United States returns to being an oil importer, was not enough to do anything for crude oil prices,” said Ed Moya, senior market analyst at Oanda Corp.

The release of reserves had already been priced in the oil markets for weeks, where oil had fallen by $ 10 from its multi-year highs in October. The focus is now on OPEC + and how the Group will react to the move from some of its largest customers. Prior to the announcement, the alliance said that a release is unjustified by current market conditions and that it may need to reconsider plans to add more offerings at a monthly meeting next week.

The United States also confirmed on Tuesday that its barrels – which make up the bulk of the emissions – will be mostly acidic or high in sulfur. It does little to solve an underlying problem of lack of sweet crude oils, which have low sulfur content. As a result, an important time spread that measures the health of these markets has increased markedly.

“This will do little to alleviate the ongoing tightness of sweet crude oils,” Energy Aspects analysts, including Amrita Sen, wrote in a note to customers. “The US-led effort to lower crude oil prices in the short term will – with everything else being equal – lead to higher prices next year.”

Of the 50 million barrels released by the United States, 32 million will be issued from the strategic petroleum reserve as a stock exchange in the coming months, and the remaining 18 million will come from an accelerated release of previously approved sales, the White House said in a statement on Tuesday. A senior official said barrels could start moving as soon as mid-December.

“By releasing reserves from the SPR, you basically only reduce the pillow you have in the event of a real crisis,” said Neil Beveridge, a senior analyst at Sanford C. Bernstein, in a Bloomberg Television interview. “It doesn’t really make a big difference physically on the market today but will probably only make things worse, rather than better, along the way.”

The report from the US Energy Information Administration also showed that inventories at the country’s largest storage hub in Cushing, Oklahoma, rose by 787,000 barrels and gasoline inventories fell by 603,000 barrels.

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