(New York) Oil prices plunged on Thursday after the announcement of United States President Joe Biden, who has pledged to draw more than 180 million barrels from American strategic reserves to relieve the market.
Posted at 3:48 p.m.
The barrel of Brent from the North Sea for delivery in May, of which it was the last day of use, dropped 4.88% to end at 107.91 dollars.
In New York, a barrel of West Texas Intermediate (WTI), expiring the same month, fell 6.99% to 100.28 dollars.
Joe Biden indicated during a speech at the White House that one million barrels would be injected daily over the next six months, or more than 180 million barrels, “in order to increase the supply […] until production ramps up later this year.”
This is the largest drain on American strategic reserves, the level of which was already at its lowest for almost 20 years (May 2022).
“The last use of reserves (50 million barrels announced in November) was not substantial enough and was completely overlooked,” said Matt Smith, an analyst at Kpler. “So this time they wanted to hit hard. »
However, “is it really worth dropping a million barrels a day to only get a drop of 5 dollars (a barrel)? he wondered. “One would have thought that an announcement like this would have aroused more reactions” from the courts.
“If this use of reserves will certainly help relax the market in the short term, it does not provide a long-term solution”, also tempered, in a note, Bart Melek, of TD Securities.
For him, this initiative could “increase, in the future, the structural risks linked to unused capacities”, he continued.
According to Matt Smith, these new barrels from strategic reserves could hit the market “within a week or two”. However, transporting such volumes continuously “could be tricky” technically, he warns.
Joe Biden’s announcement has overshadowed the decision of members of the Organization of the Petroleum Producing Countries (OPEC) and their OPEC+ allies.
At the end of their meeting, the allies decided to raise their daily production by 423,000 barrels, maintaining the cap set last July, despite calls for a higher increase while the barrel remains above 100 dollars.
“It was already integrated by the market”, according to Matt Smith.