Oil prices steady as top economies weigh releasing crude from strategic reserves

London – Oil prices steadied around $81 a barrel on Friday as investors continued to weigh the impact of potential releases of crude reserves by major economies in a coordinated effort to cool energy prices and tame surging inflation.

Brent crude was up 5 cents, or 0.06%, at $81.29 a barrel by 9.32am GMT. It fell to a six-week low on Thursday after reports of the potential releases before rebounding to end 1.2% higher on the day.

US West Texas Intermediate (WTI) crude for December delivery was up 24 cents, or 0.3%, at $79.25 a barrel, having swung through a range of more than $2 the previous session before closing higher as well.

The WTI December contract expires on Friday and most trading activity has shifted to the January future, which was up 0.14% at $78.52 a barrel.

Both Brent and WTI are set for a fourth week of declines.

Governments from some of the world’s biggest economies were looking into releasing oil from their strategic petroleum reserves (SPR) following a request from the US, first reported by Reuters for a coordinated move to cool prices.

Speculation about a US stock release has already pushed oil prices down by about $4 a barrel in recent weeks and additional supplies of up to 100-million barrels are already priced in, Goldman Sachs oil analysts said in a note.

As a result, it said any release “would only provide a short-term fix to a structural deficit”.

Brent has surged almost 60% this year as economies recover from the Covid-19 pandemic and oil cartel the Organization of the Petroleum Exporting Countries (Opec)  and allies, known as Opec+, has only raised output gradually.

The US push for reserves to be released has been seen as a signal toOpec+ that it should raise output to address concerns about high fuel prices in the world’s biggest economies.

Opec has maintained what analysts say is unprecedented restraint on production, even as prices have rebounded from the depths of the early stages of the pandemic.

In a sign of a possible easing of supplies, Asia’s spot crude market appeared to have peaked after touching near two-year highs this week, trade sources said.

Reuters