Oil slipped below $100 a barrel and is heading for its biggest weekly loss in nearly two years after the Biden administration ordered an unprecedented release of US strategic reserves to tame runaway prices.
est Texas Intermediate Futures lost as much as 1.7 percent on Friday after falling 7 percent in the previous session.
The US plans to release 1 million barrels a day for six months, although analysts warned any respite would be short-lived. The news hit the market early Thursday, just before the OPEC+ alliance rallied to ratify a modest supply increase for May.
Russia’s war in Ukraine has roiled global commodity markets, sending prices skyrocketing on everything from food to fuel and challenging governments looking to boost post-pandemic economic growth. This has led to turbulent trading in the oil market, with wild swings during the March sessions.
President Joe Biden blamed his Russian counterpart Vladimir Putin and the invasion of Ukraine for a rise in gasoline prices this year, calling it “Putin’s price hike.”
He also criticized US oil companies for being reluctant to ramp up production. The cost of retail petrol at the pump was high even before the invasion, but the war has pushed up prices worldwide.
The US has already tapped its reserves twice in the past six months, but has done little to cool prices. Up to 180 million barrels could be released this time, and Biden said he expects allies to release 30 to 50 million more barrels from their own reserves. Physical American crude prices plummeted.
The release by the US and possibly other countries will not have a significant impact on the supply and demand balance, said Jeffrey Halley, senior market analyst at Oanda Asia Pacific Pte. Brent crude is likely to fluctuate in a broad range of $100 to $120 a barrel in the coming weeks, he added.
Goldman Sachs Group Inc. lowered its Brent forecast by $10 a barrel to $125 for the second half of the year after the US release was announced. The bank said in a note that the release will not solve “oil’s structural deficit.”
The market was also under pressure this week on concerns over Chinese demand, as the world’s largest oil importer implements a series of lockdown measures to curb virus resurgence. These restrictions are beginning to impact the economy as manufacturing activity shrinks in March.
https://www.independent.ie/business/world/oil-extends-drop-below-100-as-us-plans-huge-reserves-release-41509758.html Oil volumes fall below $100 as US plans to release huge reserves