By Barani Krishnan

Investing.com – Damning indictment? Or, the natural response of a stock market that needs to rebound. 

Whatever the case, the Biden administration’s much-anticipated coordinated crude release with other major  consuming countries sent oil prices up more than 3% on the day instead — not exactly what the White House wanted.

WTI (or the benchmark crude oil from U.S.) settled at $78.50 per barrel, up 1.75 percent or 2.3%. In the previous session, it had fallen to $74.76 after an eight week low. 

The global standard for oil was also traded in London, and the crude settled at $82.31 per barrel, up 3.3%. 

Earlier on Tuesday, the U.S. Energy (NASDAQ:) Department said that President Joe Biden had authorized the release of 50 million barrels from the country’s Strategic Petroleum Reserve. Britain and India followed with an announcement of 5 million barrels and 1.5 million barrel releases from their respective reserves.

Japan, South Korea, and China are expected to also join the U.S. plan. This is after OPEC+ producers repeatedly refused to listen to the consuming nations’ calls to increase crude oil production to meet the rising demand for energy from economies recovering from the coronavirus epidemic. OPEC+ combines 13 members of the Saudi-led OPEC+ with 10 other oil producing countries steered by Russia.

Analysts believe that the announcements made Tuesday in connection with the release of coordinated crude oil reserves were inadequate to meet global demand.

“The amount of oil that we’re talking about is just a drop in the barrel so to speak,” Catherine Rampell, a Washington Post opinion writer said, referring to reserves’ release during an appearance on CNN. “We’re talking about 60 to 75 million barrels of oil globally that’s consumed in a day.”

Biden himself said Tuesday’s publication was inadequate in order to lower the market immediately. 

“While our combined efforts  will not solve the problem of gas prices overnight, it will make a difference,” the president told Americans in a televised message from the White House. It will take some time, but you’ll see gas prices drop as soon as you fill up your tank.

Many market participants also feared what the OPEC+ reactions would be. December 2nd will see the monthly meeting of the global oil producers alliance. It could reduce its pledge to produce 400,000 barrels more per day before demand from consuming countries increased.

“​​The focus is now solely back on OPEC and no one would be surprised if they scaled down their production plans given the short-term uncertainties to the crude demand outlook and some vengeance for the coordinated tapping of oil reserves,” said Edward Moya, head of US research at brokerage OANDA.

Some said that the combined release of more 55 million barrels announced under the reserves’ release could help mitigate some of the peak heating demand required for the northern hemisphere winter.

“We needed about one million barrels a day extra to fill the gap,” said Kilduff, founding partner at energy hedge fund Again Capital. “On its face, this should help to get us through early January, and then, depending on what the Asians put on, it could make the difference.” 

Kilduff also cautioned about another unknown in the oil price drama — the emergence of new Covid-19 breakouts across Europe, which have already sent Austria into a new lockdown and Germany and others into considering the same.

“These new lockdowns are a real problem for energy demand … something not many in the energy markets anticipated,” said Kilduff.

Since the Covid-19 pandemic, more than 2,000,000 new infections are reported each week in Europe.