Blockages in China and thousands of flight cancellations have done nothing to reduce demand for crude oil purchases since late December. Now, crude is threatening last year’s high of $85.41 a barrel.
It reached $84.22 today and settled down from $1.70 to $83.82. It has been one-sided since hitting a low of $66 in late December.
The next step for oil will be difficult. A report today highlighted that China agreed to release strategic oil reserves at different levels around February 1 depending on whether crude was at $75 or $85. With Brent at $86 and pennies off the October high, the odds for more action are rising.
At the same time, SPR releases are overall small amounts of oil. What we see in destroying jet fuel demand and reducing driving should far outweigh this – but it doesn’t. We’ve had huge back-to-back increases in gasoline supply in the United States and the market has fueled it. The purchase is constant.