Photo: Kristy Smith
In its latest monthly outlook, the IEA discusses its decision to release oil from global strategic reserves (including the US strategic petroleum reserve).This part, on the fact that oil is now where it was pre-announcement, is interesting: Marker crude prices fell by $5/bbl immediately after the action was announced. Since then Brent futures have oscillated between $105‐$119/bbl, and WTI between $91‐$99/bbl. At writing, flat prices of $116/bbl (Brent) and $95/bbl (WTI) are close to those seen immediately prior to the action, but will doubtless fluctuate further in the weeks ahead. However, it is blinkered to focus on specific price levels, which were never the rationale for the action. Narrower sweet‐sour spreads, modestly stronger refining margins and an easing of the steep backwardation evident before the release on the other hand all suggest a more benevolent market reaction. We acknowledge that the impact of the collective action will only be truly evident in hindsight. However, recognising the flexibility and market liquidity it has already provided, we take a resolutely positive view so far.