Oil Prices Plummet Following Strategic Petroleum Reserve Release

The surprise release of 30mn bl of oil from the Strategic Petroleum Reserve (SPR) on 22 September led to a sharp decline in futures markets, with Nymex crude and IPE Brent contracts falling by over $3.50/bl and $3.00/bl, respectively. The sudden downward rush overwhelmed technical factors, with key support levels failing to stem the decline. The IPE gasoil and Nymex gasoline contracts also fell significantly, with the latter experiencing an unexpected boost from a 2.9mn bl increase in stocks revealed by API data.

Key Takeaways:

• The release of 30mn bl of oil from the Strategic Petroleum Reserve (SPR) on 22 September led to a sharp decline in futures markets, with Nymex crude and IPE Brent contracts falling by over $3.50/bl and $3.00/bl, respectively.
• The Nymex crude contract settled at a low for the week of $30.34/bl on 28 September, while IPE Brent futures settled below $29.30/bl on the same day.
• The IPE gasoil futures contract fell back significantly after the SPR announcement, with a staggering fall of $30.75/t during the week.
• The Nymex gasoline contract posted a sharp decline of 11.66 [cts.]/USG during the week, to settle on 28 September at 86.74 [cts.]/USG.
• Technical factors were largely overwhelmed by the strong downward rush precipitated by the SPR release, with key support levels failing to stem the decline.
• Extreme volatility on the crude contracts prompted a repeat of the unusually high volumes of recent weeks, with over 378,000 lots traded on the IPE Brent contract and over 900,000 lots traded on the Nymex.

Statistics:

• Nymex crude contract fell by over $3.50/bl
• IPE Brent futures fell by almost $3.50/bl
• IPE gasoil futures contract fell by $30.75/t
• Nymex gasoline contract fell by 11.66 [cts.]/USG
• Over 378,000 lots traded on the IPE Brent contract
• Over 900,000 lots traded on the Nymex
• IPE Brent contract settled below $29.30/bl on 28 September

Sources:

• "OCTOBER 1997" [ citation from the original text ]