Will a further 50 million barrels of crude sink US gas prices?
Oil from Strategic Petroleum Reserve - US president Joe Biden is raising 50 million barrels from the country's strategic oil reserve. This can be seen as a drop in the bucket of global oil demand that would unlikely at once meet his goal of lowering gasoline prices.
In a single day, the average population lives on double that tonne of liquids in the entire world, and the economic and social development of the planet does not survive in a day. And when the Biden administration has no timetable, it would probably dole out the extra supplies over six months, and this will lower the price of the barrel of oil hovering around $80 in a single day, according to the results of a study carried out by the SocieteGenerale.
The bank has commissioned a coordinated oil reserve release that would reach 70 million barrels in height. That would have a rate of $1,30, said Michael Haigh, director of commodity research at the bank.
Everybody in the market who knows oil knows how tiny this amount is when you compare it to the global market, he said. These numbers arent big enough.
Will Saudi Arabia cut oil production?
The assumptions of Societe Generale based on current oil production and prices. based on actual results compared to current levels of production.. can decide to reduce oil production before the market used the extra supply, resulting in a much smaller price change.
Since the US has been hurt lately, so they will do whatever they can to counteract what the US is doing and keep the prices and stocks in the place where they are. "The Russians especially don't want to subsidize US gasoline purchases or US oil production, Haigh said. "So the Russians do not want to try the US's subsidized American petrol purchases and the US-operated economy," Haigh said. "They should do whatever policy they can to keep prices and inventories where they are."
In the current environment, the oil price could fall by up to 20 per cent, if sanctions were suddenly lifted and demand decreased due to the extreme pandemic.
If you can solve the problem, the key is to raise the US oil and gas production in the long run, Haigh said. If a third-hand, you'd have to negotiate with OPEC and start one, and continue working.
Cheaper oil dont mean cheaper gasoline.
At the same time, gasoline prices rose in the Societe Generale simulation.
The main reason for the high gas prices is that refiners have failed to keep up and have the pressure to keep in the process of driving. After that, the US is going to be in a mood for expansion, production could start growing in time.
In the near term, there aren't really a whole lot of policy tools in the presidents toolkit, that have meaningful impacts on oil prices or gas prices, said Brian Prest, an economist. If you are talking about the longer term, things that require oil production will eventually dramatically reduce the price of oil, said Prest, an economist of Resources for the Future. When you talk about long term, things that would cost more than the price of oil is going to end.
American Americans might remember in the past that they have paid higher prices on Nov. 24th. A gallon of regular gas sold for a national average of 104, not the $4.11 record record high set in 2008. Americans might still remember that theyve been paying higher prices.
Prest said that because of the talk in the news, gas isn't all that high. Perhaps the average gas price has been three percent more than the average number of feet for the last 20 years, Prest said. Women smugglers pay much less for the past 20 years and adjust to inflation, this price has been more than three percent for twenty years.