Attempting the reverse 2 1/2 twisting Amaranth,* the only question now is "Will they stick the faceplant landing?" or will the governbent further distort markets by entering into futures contracts?
From OilPrice, April 3:
How Biden’s Huge Strategic Oil Release Could Backfire
- President Biden’s huge SPR release announcement has pushed WTI prices back below $100.
- SPR release may calm crude prices only in the short term.
- U.S. SPR may need to be replenished at higher oil prices.
This week, the Biden administration revealed that it will release as much as 180 million barrels of crude oil in a bid to calm oil prices, which have remained above $100 per barrel for an extended period of time. The International Energy Agency, meanwhile, is coordinating a smaller but international reserve release of some 60 million barrels and has called an emergency meeting to discuss how exactly to go about it.
It remains unclear whether part of the 180 SPR release in the United States will be a completely separate endeavor or if some of these barrels will be part of the IEA release. Earlier this year, the U.S. had agreed to release 30 million barrels as part of the IEA push. What is clear is that the success of these releases in calming down oil prices is quite unlikely.
The United States last year announced the release of 50 million barrels in an effort to bring down prices t the pump, which were eroding Americans’ purchasing power and weighing on the President’s approval ratings.
This pressured prices for a few days before they rebounded, driven by continued discipline among U.S. producers, equal discipline in OPEC+, and a relentless increase in demand for the commodity.....
....Indeed, one thing that tends to get overlooked during turbulent times is that the strategic petroleum reserve of any country needs to be replenished. It’s not called strategic for laughs. And a 180-million-barrel reserve release will be quite a draw on the U.S. SPR, which currently stands at over 580 million barrels. If oil’s fundamentals remain the same, prices will not be lower when the time to replenish the SPR comes.....
...Of course this approach, releasing a million barrels/day in the run-up to the election leads to neither the demand destruction nor the incentivation of production at the heart of the old commodity trader's saying: "The cure for high prices is high prices."
