Oil falls as US considers releasing 180 million barrels from reserves

Oil falls as US considers releasing 180 million barrels from reserves

The price of Oil fell on news that the United States government is considering releasing a large quantity from the country’s reserves to tackle rising inflation and supply shortages in the aftermath of Russia’s invasion of Ukraine.

West Texas Intermediate futures cut down a fourth monthly gain to drop by about 6% to trade near $101 a barrel.

According to sources, the United States is considering a release of roughly 1 million barrels of oil a day for several months. The news comes ahead of an OPEC+ meeting Thursday and follows calls by key members for the U.S. to trust its strategy of managing the market.

The sources said the U.S. could release as much as 180 million barrels from its reserves, to provide relief to a market that’s tightened significantly due to the war in Europe. The invasion has fanned inflation and led to wild volatility across commodity markets, with global benchmark Brent crude set for the widest trading range on record this month.

There is also a diplomatic push for the International Energy Agency to coordinate a global release. A final decision hasn’t been reached on that yet.

The White House may make an announcement on the U.S. release as soon as Thursday.

Warren Patterson, head of commodities strategy at ING Groep NV in Singapore said “Suggestions that we could see up to 180 million barrels released over several months is significant and would help to ease some of the tightness in the market.”

He added that this would be the biggest release on record for the United States.

In the last six months, Biden ordered two large releases of oil from U.S. reserves but this has has little effect in curtailing the rising prices.

According to a Bloomberg survey, OPEC+ is expected to ratify a modest output increase of 432,000 barrels a day for May.

Record U.S. gasoline prices may be crimping consumption as the cost to fill up tanks soars. U.S. gasoline demand fell for a third consecutive week, according to the Energy Information Administration, defying seasonal trends.

 

Source: News24

Author: Greg