The International Energy Agency’s (IEA) release of emergency oil supplies has increased the market’s nervousness, claims Deutsche Bank.
Last week the IEA announced that its members would make 60 million barrels of oil available to ease the pressure on supplies and help lower the price of oil, which has recently been hovering around $120 per barrel.
Announcing the decision, the IEA’s Executive Director Nobuo Tanaka said the move showed “strong commitment to well-supplied markets and to ensuring a soft landing for world energy markets.”
Far from stabilising the market though, a new report from Deutsche Bank suggests that the move has had the opposite effect.
Entitled Emergency? What Emergency?, the report reads: “On balance, the release has increased the nervousness of markets by adding uncertainty and randomness.”
Arguing that there is no emergency in oil supplies because no refiners are talking about oil shortages, the report adds that the responses it had received from the industry “varied from the nonplussed to the aggressively negative… Overall the sentiment was bewilderment, another confusion for a tough market.”
The oil release will be available to buy for a 30-day period, when the IEA will review the need for more action.