By Gina Lee
Investing.com – Oil was down on Thursday morning in Asia, tumbling more than $5 a barrel as the U.S. considers releasing up to 180 million barrels from its strategic petroleum reserve (SPR) over several months.
Brent oil futures fell 4.85% to $106.04 by 12: 56 AM ET (4:56 AM GMT). WTI futures slid 5.86% to $101.5 after earlier dropping to a low of $100.85.
U.S. President Biden is expected to announce the SPR release plan later in the day, according to three sources. "If it turns out to be as much as that, it would be significant and so would certainly help to a certain extent to fill the shortfall, but not all of it," ING head of commodities strategy Warren Patterson told Reuters, referring to the 180 million barrels figure.
"Another key question is whether this volume would be part of a wider coordinated release."
The U.S. last announced plans for an SPR release earlier in the month, when it said it would sell 30 million barrels from the strategic reserves as part of a global release of 60 million barrels. It also announced plans to release 50 million barrels in November 2021.
"I guess we need to also see if this would be a straightforward release or an exchange," said Patterson.
However, other investors remain skeptical about the release’s impact.
"It's a sentiment shock, but if recent history suggests anything the reserve release will only be a temporary fix and akin to putting a band-aid on a broken leg," SPI Asset Management managing partner Stephen Innes told Reuters.
The International Energy Agency has called an emergency ministerial meeting for Friday to discuss oil supply, a spokesperson for Australian energy Minister Angus Taylor said on Thursday. The Organization of the Petroleum Exporting Countries and allies (OPEC+) will also meet on Thursday, where it is widely expected to stick to its existing deal to gradually increase production.
The black liquid settled up around 3% on Wednesday, after peace talks between Russia and Ukraine to end a war triggered by the Russian invasion of Feb. 24 showed little progress, and supply concerns increased.
Meanwhile, Wednesday’s U.S. crude oil supply data from the U.S. Energy Information Administration showed a draw of 3.449 million barrels for the week to Mar. 25. Forecasts prepared by Investing.com predicted a draw of 1.022 million barrels, while a 2.508-million-barrel draw was recorded during the previous week.
Crude oil supply data from the American Petroleum Institute, released the day before, showed a draw of 3 million barrels.