Business

Joint oil release set to have limited market impact, says head of PAJ

TOKYO : The volume of the U.S.-led coordinated oil release by consuming countries from national reserves is relatively small and is expected to have a limited impact on oil markets, the head of the Petroleum Association of Japan (PAJ) said on Thursday.

“Since the volume is small, I think it is aimed at easing tightness in supply, rather than having a big impact on oil markets,” Tsutomu Sugimori, president of the PAJ told reporters.

He added he did not think the release “would worsen our relation with producing countries”.

The United States and several other nations, including Japan, agreed to release stocks after failing to convince the Organization of the Petroleum Exporting Countries to pump more oil.

Japan on Wednesday announced a plan to release “a few hundred thousand kilolitres” of oil from its national reserve.

Some market analysts have suggested that OPEC+, which groups OPEC and allied producers, including Russia, could halt a series of planned output increases in response to the release of stocks by major consumers.

OPEC expects the oil release to swell a surplus in oil markets by 1.1 million barrels per day (bpd), a source from the group said, but OPEC+ sources have told Reuters the group is not yet discussing a pause of its output increases.

Sugimori, who also serves as chairman of Eneos Holdings, said domestic consumption of gasoline and other refined products slowed in November due to higher oil prices and the trend would likely continue.

Refiners, however, have received higher orders for fuel oil for power generation from utilities to secure adequate supply during the peak winter demand season.

“It’s much cheaper for utilities with oil-fired power plants to produce electricity than to buy expensive spot LNG, so we are getting lots of inquiries,” he said.

Eneos has received 2.5 times as many orders for fuel oil for October-March as it had initially forecast, but it would only be able to meet twice the expected demand because of the infrastructure bottleneck, he said.

(Reporting by Yuka Obayashi; Editing by Himani Sarkar and Barbara Lewis)

Joint oil release set to have limited market impact, says head of PAJ Source link Joint oil release set to have limited market impact, says head of PAJ

Back to top button