Oil down as White House proposes selling US oil reserves

Reuters
A release of US strategic reserves could jolt an already imbalanced oil market and undermine attempts by OPEC and other producers, including Russia, to end a persistent supply glut. (Reuters)

LONDON: Oil prices fell on Tuesday, weighed down by US President Donald Trump’s plan to sell off half the country’s huge oil stockpile, threatening a future glut even as the Organization of the Petroleum Exporting Countries (OPEC) and its allies look set to extend output cuts in a bid to tighten the market.
Brent crude ended a run of four days of consecutive gains to trade 21 cents lower at $53.66 per barrel at 1142 GMT.
US light crude was down 19 cents at $50.94.
The White House plan to sell off half of the nation’s 688 million-barrel oil stockpile from 2018 to 2027 aims to raise $16.5 billion and help balance the budget.
It is only a proposal and may not take effect in its current form. “Congress needs to agree to this which is rather uncertain,” said Carsten Fritsch, a commodity analyst at Commerzbank. “But of course, it could weigh on the back end of the forward curve.”
A release of US strategic reserves could jolt an already imbalanced oil market and undermine attempts by OPEC and other producers, including Russia, to end a persistent supply glut.
Oystein Berentsen, managing director for oil trading company Strong Petroleum in Singapore, said the White House proposal was a surprise but that over a 10-year period the sales would only average around 95,000 bpd.
Releasing reserves would add supplies to already high and rising US production.
Goldman Sachs has already warned of “risks for a renewed surplus later next year if OPEC and Russia’s production rises to their expanding capacity and shale grows at an unbridled rate.”