Oil markets whirled with news Tuesday as the Biden Administration prepared a 26-million-barrel sale of Strategic Petroleum Reserve crude, and the Organization of Petroleum Exporting Countries ratcheted higher its estimated demand increase for China this year.
The White House announced late Monday the SPR sale, a move mandated by Congress. It follows last year's release of 180 million SPR barrels, as the Biden administration aimed to ease oil prices driven higher by, among other factors, Russia's attack on Ukraine. Oil market are currently well supplied, with prices holding roughly even to where they were through most of 2021.
The 26-million barrel auction — a public auction selling the oil to the highest bidder — would drive SPR stockpiles even further into multidecade lows.
To cancel the sale, Congress would need to step in and agree to alter its mandate.
Oil Prices Slide, Despite OPEC Demand Boost
On Tuesday, OPEC updated its closely-watched forecast for 2023 global oil demand. The monthly report projected global oil demand rising by 2.32 million barrels per day in 2023, up 1,000 bpd vs. its January report.
China represented a big piece of that increase, with OPEC now estimating a 590,000 bpd rebound in demand as the country gets back on its feet after dismantling strict Covid policies. January's outlook called for a 510,000 rise.
The group now forecasts 2.6% global economic GDP growth for 2023, up from a previous 2.5% estimate. Economic downturns and interest rate increases remained as potential risks.
OPEC said its crude oil output in January fell by 49,000 to 28.88 million bpd, according to Reuters. Output decreased in Saudi Arabia, Iraq and Iran, offsetting increases among other OPEC members.
Oil prices slumped in early trade. U.S. West Texas Intermediate dropped 2.9% to below $78 a barrel, continuing to bob in a range between $70 and $82. Brent crude, the international benchmark, fell 2.5% to just below $85.
