Oil prices fall as White House proposes U.S. oil reserve sales
Oil prices fell on Tuesday after U.S. President Donald Trump proposed the sale of half the country's strategic oil reserves in his budget plan, just as producer club OPEC and its allies are cutting output to tighten the market.After rising in Asian morning trading, Brent crude futures LCOc1 reversed their gains and were at $53.66 per barrel at 0232 GMT, down 21 cents, or 0.4 percent, from their last close.U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $50.94, down 19 cents, or 0.4 percent.
The White House plan would gradually sell off half of the nation's emergency oil stockpile to raise $16.5 billion from October 2018, documents released by the administration late on Monday showed. budgets are often ignored by the U.S. Congress, which controls federal purse strings.The plan was released just a day after Trump left OPEC's de-facto leader Saudi Arabia for his first overseas state-visit. large release of U.S. strategic reserves would jolt oil markets, where the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, have pledged to cut supplies by 1.8 million barrels per day (bpd) in order to tighten the market and prop up prices.Traders said that as any sales would only start next year and be gradual, their impact would be bigger on longer-term prices rather than those for immediate delivery.
The U.S. strategic petroleum reserves (SPR), the world's biggest, currently stand around 688 million barrels, a week's worth of global oil demand. SPR-STK-T-EIA .Virendra Chauhan, analyst at Energy Aspects, said sour crudes made up 60 percent of U.S. SPRs, while sweet crude grades made up the rest.U.S. production C-OUT-T-EIA is already at 9.3 million bpd, not far off levels of top suppliers Saudi Arabia and Russia.
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