Oil prices stabilise after wild swings on prospect of crude stockpiles release

TOKYO: prices steadied on Friday as investors paused for breath following a day of wild swings prompted by the prospect of coordinated action by the world’s major economies to release official crude reserves from stocks.

Brent crude was up 28 cents or 0.3% at $81.52 a barrel by 0145 GMT, after falling to a six-week low on Thursday before rebounding to close 1.2% higher.

U.S. crude was up 19 cents at $79.20 a barrel, having swung through a more than $2 range the previous session before closing up. Both are heading for a fourth week of declines.

The market gyrations followed a Reuters report that the United States had asked China, Japan and other big buyers to join a release of crude stocks from Strategic Petroleum Reserves (SPR).

“The market remains fundamentally tight and any volumes released are unlikely to substantially alter the global balance,” Fitch Solutions commodities analysts said in a note. “As such, we expect any downside to prices to be limited in both scale and duration.”

The Biden administration’s push for a coordinated release of oil stockpiles has been seen as a signal to the OPEC+ production group that it should raise output to address concerns of high fuel prices in the world’s biggest economies, starting with the United States, China and Japan.

OPEC+, grouping the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, has maintained what analysts says is unprecedented restraint on production, even as prices have rebounded from the depths of the early stages of the coronavirus pandemic.

Meanwhile data showing Saudi Arabia’s oil exports hit an eight-month high in September, rising for a straight fifth month, also helped keep prices in check.