Oil Prices Continue to Drop to Levels Not Seen in Weeks

Crude oil prices continued their decline on Tuesday as WTI fell to levels not seen before the OPEC+ meeting.

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

The price drop is partly attributed to talks to release more barrels from the US Strategic Petroleum Reserves. Initial reports suggested the Biden Administration could release 10 million barrels and another 15 million barrels from the country’s SPR. However, later reports clarified that the figure discussed is a fraction of the 180 million barrels that will be released between March and October, previously announced by the Biden Administration. Oil could be sold this week and could be the last tranche of 180 million barrels.

But oil markets are still timid that the United States could release more oil from the SPR to counter high gasoline prices ahead of the midterm elections. The United States has been authorized by Congress to sell an additional 26 million barrels of crude oil from the SPR in the fiscal year 2023, which began on October 1, raising concerns that the United States may take action to release it soon rather than spread it throughout the year. .

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

Besides the release of the SPR, another factor affecting oil prices is the fear of continued recession that could reduce oil demand.

By Julianne Geiger for Oilprice.com

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