People's Daily Online, Beijing, November 27 (Fang Jinglun) The US government announced on the 23rd that it will release crude oil reserves in conjunction with a number of major oil-consuming countries to cool oil prices. The U.S. Department of Energy will release 50 million barrels of crude oil from the Strategic Petroleum Reserve and start selling it to the market as early as mid-to-late December this year. According to Xinhua News Agency, Helima Croft, head of global commodity strategy at Royal Bank of Canada Capital Markets, predicts that given that India has announced plans to release 5 million barrels of crude oil reserves, coupled with releases from Japan, South Korea, the United Kingdom and other countries. The scale of crude oil reserves jointly released by multiple countries is expected to be 65 million to 70 million barrels.
Guo Yi, a professor at the School of International Economics and Management of Beijing Technology and Business University, said that the deep-seated reason for the rise in international oil prices is that the United States has over-issued US dollar currencies for a long time, leading to a rise in US dollar-denominated oil prices. In addition, since the epidemic, the world's major oil-producing countries have increased their expectations of uncertainty about the prospects for international economic development, which has correspondingly reduced the amount of oil released to the international market, leading to an imbalance in supply relations.
On the day of the release of US crude oil reserves, the New York Mercantile Exchange crude oil futures price (WTI) and London Brent crude oil futures prices rose by 2.28 and 3.27, respectively. Why did oil prices rise instead of falling that day?
"The release of strategic inventory in the United States has been expected in the market, the market has digested the expectation in advance, and the release of reserves is far less than the market expected." Dong Kangyin, deputy director of the Department of Energy and low-carbon Economics, School of International Economics and Trade, University of International Business and Economics, believes that the release of crude oil reserves is mainly to deal with the impact of oil supply and the abnormal rise in oil prices, but it is difficult to solve the fundamental contradiction between supply and demand. At present, the northern hemisphere winter oil demand increased significantly, but the supply is relatively tight, the strategic inventory release scale is not large, not enough to change the supply and demand structure and calm oil prices.
"Some countries, including the major members of the Organization of Petroleum Exporting Countries (OPEC), have not responded much to the release of crude oil inventories by the United States." Guo Yi believes that this phenomenon also reflects the decline in the ability of some countries to control international oil prices and the appeal of coordinated action with oil-producing countries.
So, how will the release of crude oil reserves by many countries affect China?
"At present, the release of crude oil reserves has not had much impact on our country." Dong Kangyin said that China is a major oil consumer and importer, and the decline in oil prices will benefit my country's development. Even if the ultimate effect of releasing crude oil reserves is minimal, in the face of high oil prices, my country's foreign exchange reserves are sufficient and are still within the acceptable range.
On November 24, Chinese Foreign Ministry spokesperson Zhao Lijian stated at a regular press conference that China will arrange the release of national crude oil reserves according to its own actual conditions and needs, and take other necessary measures to maintain market stability, and release relevant information in a timely manner.
"By putting in its own strategic reserves of oil, it can smooth out the impact of imported inflation brought about by rising international oil prices." Guo Yi believes that for China, it is necessary to pay close attention to and rationally analyze the different forces that cause crude oil price fluctuations in the international market, and at the same time take some positive measures to stabilize the fluctuations in international oil prices, such as increasing the supply of domestic crude oil reserves, so as to ensure the healthy and sustainable development of its own economy.
According to Xinhua News Agency on November 26, South Africa's health department announced on the 25th that the country has found a new variant strain of the new coronavirus. Crude oil suffered a heavy setback on the news, with WTI crude futures down 13.139 per cent and London Brent crude futures down 11.369 per cent at press time.
"The main reason for the decline in crude oil on the 26th was the market panic caused by the epidemic, which was not linked to the release of crude oil reserves in the United States." Dong Kangyin said that the short-term fluctuations in the market caused by emergencies do not represent the real impact of the release of crude oil reserves. Therefore, the timing, quantity and manner of releasing crude oil reserves in China still need to be further watched and decided in due course.
(Source People's Network)