Oil prices edged higher, rebounding after the previous session’s hefty losses after the two largest economies in the world, the U.S. and China, said they were looking at releasing supplies from their strategic reserves.
By 9 AM ET (1400 GMT), U.S. crude futures traded 0.3% higher at $77.79 a barrel, after dropping 3% during the last session, while the Brent contract rose 0.3% to $80.52, after falling 1.7% on Wednesday.
U.S. Gasoline RBOB Futures were down 0.1% at $2.2779 a gallon.
Both crude benchmarks recorded their lowest settlement levels since early October on Wednesday after the Biden administration requested a coordinated move to release strategic supplies by some of the globe’s largest consumers in order to curb global energy prices.
China, the world’s largest importer of crude, confirmed earlier Thursday that it was working on a release of its crude oil reserves, while Japan and South Korea declined to take part.
The decision of the U.S. to reach out and discuss a coordinated move reflects frustration with the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, over their refusal to speed up the return of global oil supply to pre-pandemic levels.
“While a release from the SPR would only provide some short-term relief to the market, that may be all that is necessary, given the expectation that the global oil market could return to surplus as early as 1Q22,” said analysts at ING, in a note.
The International Energy Agency said earlier this week that global oil output increased by 1.4 million barrels a day last month, and will add as much again over November and December as production in the U.S. is ramping up in tandem with stronger oil prices.
Additionally, OPEC Secretary General Mohammad Barkindo said this week that he expects an oil supply surplus as early as December and the market to remain oversupplied next year.
This expected increase in U.S. production didn’t show up in the weekly Energy Information Administration crude inventories data on Wednesday, as this showed a draw of more than 2 million barrels in U.S. crude stockpiles last week, the biggest drop since mid-September.