Oil down as White House proposes selling US oil reserves

Oil prices fell on Tuesday, weighed down by US President Donald Trump’s plan to sell off half the country’s huge oil stockpile, threatening a future glut even as the Organization of the Petroleum Exporting Countries (OPEC) and its allies look set to extend output cuts in a bid to tighten the market.
Brent crude ended a run of four days of consecutive gains to trade 21 cents lower at $53.66 per barrel at 1142 GMT.
US light crude was down 19 cents at $50.94.
The White House plan to sell off half of the nation’s 688 million-barrel oil stockpile from 2018 to 2027 aims to raise $16.5 billion and help balance the budget.
It is only a proposal and may not take effect in its current form. “Congress needs to agree to this which is rather uncertain,” said Carsten Fritsch, a commodity analyst at Commerzbank. “But of course, it could weigh on the back end of the forward curve.”
A release of US strategic reserves could jolt an already imbalanced oil market and undermine attempts by OPEC and other producers, including Russia, to end a persistent supply glut.
Oystein Berentsen, managing director for oil trading company Strong Petroleum in Singapore, said the White House proposal was a surprise but that over a 10-year period the sales would only average around 95,000 bpd.
Releasing reserves would add supplies to already high and rising US production.
Goldman Sachs has already warned of “risks for a renewed surplus later next year if OPEC and Russia’s production rises to their expanding capacity and shale grows at an unbridled rate.”

Source: Arab News