Oil prices dive as US releases massive reserves
Oil prices fell sharply below $107 a barrel on Thursday as the US administration considered releasing crude from its Strategic Petroleum Reserve (SPR) for several months.
Crude oil prices tumbled on Wednesday after concerns over supply, tracking a fall in US oil reserves focused on supply disruptions.
Benchmark Brent crude futures were trading down 6 per cent, or around $7 a barrel, at $106.8 a barrel. But the volatility was reflected in the trading price range between $106.5 and $112.94.
US West Texas Intermediate futures were down more than $6 a barrel to trade at $101.37 a barrel, having fallen from an earlier low of $100.85.
But a Reuters poll of 40 economists and analysts showed oil prices will remain well above $100 this year as a dry market struggles to distance itself from Russian oil.
Brent crude was projected to average $103.07 a barrel this year, a jump from the previous poll’s consensus of $91.15 and the highest 2022 estimate so far in Reuters polls.
On Wednesday, Brent prices rose 3 percent higher driven by supply concerns as peace talks between Russia and Ukraine to end the war stalled and doubts oil-producing countries, due to meet today, would be able to increase supplies. Will be
US President Biden is expected to announce plans to release oil from his vast emergency stockpile, aimed at slashing gasoline prices that have risen to a record low after Russia’s invasion of Ukraine.
The move will be the third time the US has tapped its strategic reserves in the past six months and will be the most significant release in the nearly 50-year history of the SPR.
So far, US releases have not managed to push prices down as world demand has almost reached pre-pandemic levels, while supply has tightened globally.
Oil prices have risen since Russia invaded Ukraine in late February, and the US and allies responded with heavy sanctions on Russia, which is the world’s second largest exporter of crude.
Brent crude rose to around $140 a barrel earlier this month, the highest since the 2008 financial crisis, and has remained above $110 a barrel since Russia’s invasion of Ukraine on February 24.