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Oil pulls back as US considers selling strategic reserves

The pipelines move to Enbridge Inc. crude oil storage tanks at their tank farm in Cushing, Oklahoma on March 24, 2016. Photo taken March 24, 2016. REUTERS / Nick Oxford / File Photo

  • US plans to sell strategic oil reserve
  • Surprise rise in US stocks weighs on WTI and Brent

LONDON, Oct. 7 (Reuters) – Oil prices extended losses from the previous session on Thursday, as the United States said it was considering selling oil from its strategic reserves and Russia declared itself ready to stabilize the natural gas market.

Brent crude prices fell 16 cents, or 0.2%, to $ 80.92 a barrel at 1306 GMT, after hitting a session low of $ 79.08. WTI crude futures fell 30 cents, or 0.4%, to $ 77.13 a barrel, after hitting a session low of $ 74.96.

Both contracts fell about 2% on Wednesday.

“The crude market could be less tight if the United States drew on strategic crude reserves and if Russia managed to send more natural gas to Europe, it could lead to less substitution of natural gas for crude,” said UBS analyst Giovanni Staunovo.

U.S. Energy Secretary Jennifer Granholm said on Wednesday the administration was considering tapping the country’s Strategic Petroleum Reserve (SPR) to curb a spike in gasoline prices, the Financial Times reported. Read more

Granholm also did not rule out a ban on crude exports, which was lifted in 2015.

Goldman Sachs said a likely release from SPR, which could reach 60 million barrels, posed only a $ 3 downside risk to its Brent price forecast at $ 90 a barrel at the end of the year.

A larger than expected rise in US crude inventories last week also weighed on prices.

Inventories rose 2.3 million barrels, the US Energy Information Administration said, against expectations of a modest drop of 418,000 barrels.

Russian President Vladimir Putin said on Wednesday that Russia was increasing gas supplies to Europe, including through Ukraine, in response to the energy crisis and stood ready to stabilize the market amid soaring prices .

Such a move could help cool record gas prices.

Analysts say as winter approaches, these gas prices could impact the already tight crude market as some users turn to oil. Read more

Earlier this week, the Organization of the Petroleum Exporting and Allied Countries (OPEC +) agreed to stick to its plan to boost production by 400,000 bpd in November, pushing crude prices to new levels. multi-year summits. Read more

OPEC + ‘s decision was partly driven by fears of weakening demand and prices, sources close to the group told Reuters. Read more

(This story is corrected to show that US stocks rose, not fell in paragraph 8)

Additional reporting by Naveen Thukral in Singapore; edited by Jason Neely, Kirsten Donovan

Our standards: Thomson Reuters Trust Principles.


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