The crude oil price has cooled from its recent OPEC-driven push to the $94 level.
Recent gains in stocks have reversed in the middle of the week, but oil was higher.
USOIL – Daily Chart
The recent price channel provides a support level for oil prices. If they get back above the track, then new highs are possible. Falling back into the channel could target $75 or even $70.
Oil prices are higher after the US President committed to selling more of the nation’s oil stocks. The latest sale will be of 15 million barrels, and the release would be the newest part of a deal struck earlier to release 180 million barrels of oil from energy companies. According to Bloomberg, the announcement is expected to come at the end of the week.
The White House being unhappy, has also been targeting oil companies to increase production and refining to bring down the price of fuel.
“You should be using these record-breaking profits to increase production and refining,” the President said. “Invest in America for the American people. Bring down the price you charge at the pump to reflect what you pay for the product.”
The President also outlined plans to refill the reserve when oil prices drop to $70 a barrel. He said it would allow oil companies to ramp production, knowing they’d “be able to sell their oil to us at that price in the future.”
With the price of a barrel down 30 percent since the spring, the White House said that should be reflected in prices at the pump.
“My message to oil companies is this: You’re sitting on record profits. And we’re giving you more certainty so you can act now to increase oil production now,” Joe Biden said.
Crude oil moved higher on the news and a drawdown of oil stocks in the weekly inventories data. US inventories fell by around 1.3 million barrels for the week ended Oct. 14, according to the American Petroleum Institute.
US crude inventories were expected to have increased for a second consecutive week, rising by 1.4 million barrels in the week to Oct. 14, an extended Reuters poll showed on Tuesday.
A pullback in the US dollar helped crude prices, and recession fears slowed for the global economy. Traders are looking ahead to EU sanctions on oil in December and February, which may also hit the global oil supply.
“We expect Russian production to decline by 0.6 million barrels per day by year-end (in addition to the 400,000 barrels per day drop since February), as Europe implements both its embargo on Russian oil purchases as well as a ban on crucial services like shipping, insurance, and financing,” JP Morgan analysts said.
Market sentiment for oil trading has been weaker in recent sessions, but there are growing obstacles to further lows, and the EU sanctions may not bring oil prices lower.
