So bombarded are we now with talk of higher inflation, at least due in part to higher energy prices, it may have escaped some people’s notice that the price of crude oil has been falling for most of the last month.
Since hitting an intraday high on 25 October of $86.70, which was the highest price since early October 2018, the price of a barrel of Brent crude has fallen in each of the last four weeks – falling to as low as $77.58 at one point on Monday.
The same factor has been at play in West Texas Intermediate (WTI), the main US crude contract, which hit an intra-day peak of $85.41 on 25 October, the highest since October 2014, only to fall to as low as $74.76 on Monday.
One of the explanations for this decline has been the growing expectation that the US government would release a certain amount from its Strategic Petroleum Reserve (SPR) in order to bring supply and demand more closely into balance.
This duly came to pass on Tuesday. The White House announced that some 50 million barrels of crude will be released from the SPR, which was created in 1975 following the oil shocks earlier in the decade.
Of that 50 million barrels, the sale of some 18 million barrels had already previously been authorised by US Congress, with the process merely being accelerated.
The larger portion, some 32 million barrels, will be made available over the next several months in an exchange deal with consumers.
It is not known whether on the other side of the exchange will be oil and gas companies, such as Exxon Mobil, or individual countries. But crude released in the exchange will eventually be returned to the SPR in coming years.
The White House said: “American consumers are feeling the impact of elevated gas prices at the pump and in their home heating bills and American businesses are, too, because oil supply has not kept up with demand as the global economy emerges from the pandemic.
“That’s why President Biden is using every…
Source : skynews
