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Largest Ever Petroleum Reserve Release Forces Oil Lower

U.S. West Texas Intermediate crude oil futures are edging lower on Friday as traders await the outcome of a meeting of International Energy Agency (IEA) member nations set to discuss a release of emergency oil reserves alongside a huge planned release by the United States.

The U.S. benchmark is on course for a 12%-13% weekly decline – the sharpest in almost two years, after an earlier surge driven by the Ukraine conflict had seen prices rise by more than 30%.

The limited price action suggests traders are still digesting the bearish news that drove prices sharply lower the previous session. On Thursday, U.S. President Joe Biden announced a release of 1 million barrels per day (bpd) for six months, starting in May, the largest release ever from the U.S. Strategic Petroleum Reserve (SPR).

On paper the news is short-term bearish, however, we have some doubts as to whether the SPR release will have a long-term bearish influence on prices. The daily flood of U.S. crude into supply will not change the fact that the market will continue to struggle to find enough support over the next several months. With 3 million bpd of Russian oil expected to be wiped off the books, the 1 million bpd release will not be enough to offset the loss of Russian oil.

The limited follow-through to the downside early Friday suggests it may take additional help from other countries to drive crude oil prices substantially lower, but this is a possibility since the International…

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  • Steve on April 01 2022 said:
    Who comes up with this crap?

    By the way he just cost every American by releasing crude that cost approximately $29.00/bbl. To replenish it no one knows what it will cost but a drunk monkey can figure out it will be more than 29 bucks!

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