Exclusive-China agrees with U.S. to release oil reserves near Lunar New Year

© Reuters. FILE PHOTO: A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson/File Photo

By Nidhi Verma and Timothy Gardner

(Reuters) – China will release crude oil from its national strategic stockpiles around the Lunar New Year holidays that start on Feb. 1 as part of a plan coordinated by the United States with other major consumers to reduce global prices, sources told Reuters.

The sources, who have knowledge of talks between the world’s top two crude consumers, said China agreed in late 2021 to release an unspecified amount of oil depending on price levels.

“China agreed to release a relatively bigger amount if oil is above $85 a barrel, and a smaller volume if oil stays near the $75 level,” said one source, without elaborating.

The release of crude stocks by China will occur around the Lunar New Year, the sources said. China will be closed for the biggest annual holiday from Jan. 31 to Feb. 6.

China’s National Food and Strategic Reserves Administration did not immediately respond to a request for comment.

The agreed release of reserves by China is the result of a series of discussions, reported by Reuters in November, that the Biden administration held with other major oil consumers after tight supplies drove global oil prices to multi-year highs..

Biden and top aides discussed the possibility of a coordinated release of crude stocks with close allies including Japan, South Korea and India, as well as with China.

The United States has conducted crude swaps and sales from its reserves over the past few weeks while Japan and South Korea have also announced plans for crude sales.

China, which has long kept details on its state reserves a secret, conducted last September its first-ever public crude reserves auction of about 7.4 million barrels, about half a day’s consumption in the country.

In November, the National Food and Strategic Reserves Administration said it was “working on” a release of crude reserves, but declined to comment on the U.S. request for the coordinated release among buyers.

Oil prices rebounded above $80 a barrel this week buoyed by supply disruptions in Libya and Kazakhstan, a fall in inventories to their lowest since 2018, and an improvement in the outlook for fuel demand in Europe as governments there ease COVID-19 restrictions. [O/R]

Benchmark futures was at $84.79 a barrel and U.S. West Texas Intermediate crude at $82.23 a barrel at 0730 GMT.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Leave a Reply

Your email address will not be published.