Oil stocks jump after Biden releases 50 million barrels of US strategic oil reserve – United States Oil Fund (USO)

the US Oil ETF (NYSE: USO) traded up 2.4% on Tuesday after President Joe Biden announced that it would release oil from US strategic reserves in an attempt to lower global gasoline prices.

What happened? The White House said on Tuesday that the United States would release 50 million barrels of crude oil from its strategic oil reserve. The move is part of a coordinated effort with China, Japan and other energy-consuming countries to fight rapidly rising energy prices. Gasoline prices in the United States are currently near seven-year highs.

Why this is important: The coordinated oil release includes the United States, India, China, Japan, Korea and the United Kingdom and is the first of its kind in history.

“The president is ready to take further action, if necessary, and is ready to use his full authority working in coordination with the rest of the world to maintain an adequate supply as we emerge from the pandemic,” the White House said in a statement.

As of November 19, the US SPR held 604.5 million barrels, according to the Department of Energy. The current version represents about 8.2% of the total US SPR.

Related Link: Occidental Petroleum Announces Asset Sale in Ghana: What Investors Need to Know

It is not the first time the USA took oil out of their SPR:

  • In 1991, President George HW Bush released 17 million barrels in the First Gulf War.
  • In 2005, President George W. Bush released 11 million barrels from Hurricane Katrina.
  • In 2011, President Barack Obama released 30 million barrels to counter production disruptions in Libya.

“On the surface – the WH announcement and details just leave me disappointed – go big or go home, and I think the WH has hit,” GasBuddy analyst Patrick De Haan said. on Twitter. “Oil is trading slightly higher, make no mistake – if OPEC comes out soon and has a strong statement, we’ll be back to $ 80 in no time.”

Several oil and gas stocks were among the biggest winners in the S&P 500 on Tuesday after the announcement:

  • Devon Energy Corp (NYSE: DVN) shares rose 4.8%.
  • APA Corp (United States) Stocks (NASDAQ: APA) rose 5.3%.
  • Hess Corp. (NYSE: HES) shares rose 5.2%.

Benzinga’s point of view: Given that oil and natural gas prices were trading significantly higher on Tuesday after the SPR release was announced, it appears the market has already considered the possibility of an even larger release. Bank of America recently forecast that Brent crude oil prices will average $ 85 per barrel in 2022, with prices peaking as high as $ 120 per barrel.

Source link

Felix J. Dixon