Joint oil release expected to have limited impact on market, PAJ chief says

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

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

He added that he did not think that the liberation “would worsen our relations with the producing countries”.

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

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

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

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OPEC expects the release of oil to inflate a surplus in oil markets of 1.1 million barrels per day (bpd), a group source said, but OPEC + sources told Reuters that the group was not yet discussing a hiatus from its production increases.

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

However, refiners have received higher orders for fuel oil for power generation from utilities to ensure adequate supply during the peak winter demand season.

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“It’s much cheaper for utilities with oil-fired power plants to generate electricity than it is to buy expensive spot LNG, so we get a lot of inquiries,” he said.

Eneos received 2.5 times more fuel orders for October-March than initially expected, but it could only meet the expected demand twice due to the infrastructure bottleneck, a- he declared.

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

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