How the New Budget Deal Will Affect the Oil Market

Jon Economy, Government, Market Commentary, Politics

This is a syndicated repost courtesy of Money Morning. To view original, click here.
The House of Representatives just voted to approve a budget deal to raise the U. S. debt ceiling. And buried in this last-minute accord designed to save us from another government shutdown is a provision to sell oil from the Strategic Petroleum Reserve (SPR).
The sales are not scheduled to begin until 2018 and run through 2025. In all, 58 million barrels will be sold – starting with an annual amount of 5 million and then doubling per year beginning in 2023.
In the past, the SPR volume was sold off to offset regional domestic shortages in distillate products or, more rarely, tried in an attempt to influence a price reduction when oil was well above $100 a barrel.
The former has not been a consistent policy and the latter (influencing prices) was a dismal failure.

This post was published at Wall Street Examiner by Dr. Kent Moors ‘ October 30, 2015.