Commodities

Stocksak: U.S. SPR crude oils to have a moderate price influence

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© Stocksak. FILE PHOTO – The Goldman Sachs company logo can be seen on the New York Stock Exchange (NYSE) floor in New York, U.S.A., April 17, 2018. REUTERS/Brendan McDermid

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(Stocksak). The Biden administration’s plan for continuing to release the Strategic Petroleum Reserves(SPR) to bring down retail prices poses limited downside, Goldman Sachs (NYSE) stated in a Thursday note.

Wednesday’s announcement by President Joe Biden that the United States will sell 15,000,000 barrels (mb), from its SPR by the end of the year, was made by Joe Biden. This is to prevent oil prices rising in the wake OPEC+ oil-producing countries’ decision to reduce oil production.

The announcement did not reduce oil prices. Official U.S. data indicated that the SPR fell to their lowest level since mid-1984. Commercial oil stocks however declined unexpectedly. [EIA/S] [O/R]

“Incidental sales of SPR are the most likely action (16 mb is available starting FY2023 Congressionally required sales), but this is price dependent… This release is unlikely to have much impact (

Goldman stated that retail gasoline prices would need to be higher than current levels to warrant such a release. He also said that the threshold will shift significantly higher towards the $125/bbl crude oil range or $5/gal retail gasoline range after the political hurdle of the November U.S. Midterm elections is over.

Goldman warned that a ban on product exports from the United States could cause gasoline and distillate prices to rise by $150/bbl and $50/bbl, respectively. However, it would still be possible for domestic shortages and higher prices.

The bank had this month increased its 2022 price forecast from $104 per barrel to $110 per barrel. This was because it believed that the 2 million bpd reductions by OPEC+ producers would be “very bullish” for prices.

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Stocksak Editorial

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