Oil prices drop below $105 as Biden's record release of stocks and IEA's emergency meeting lift supply hopes
- Oil traded below $105 on Friday after Biden announced the largest-ever supply release from US emergency reserves.
- The 180-million barrel US release is the third time the Biden administration has tapped the SPR in the last six months.
Oil prices traded below $105 a barrel Friday, after President Joe Biden announced the largest-ever release of supply from US stockpiles, and with the International Energy Agency set to decide on a collective release later in the day.
Brent crude futures fell 1.2% to $103.40 a barrel around 7:50 a.m. ET, while West Texas Intermediate was 1.6% lower at $98.64 a barrel in somewhat volatile trading.
"The price slide is due to Biden's announcement yesterday evening that an unprecedented 180 million barrels will be released from the country's strategic oil reserves between May and October," Commerzbank's Carsten Fritsch said.
Biden said Thursday the US government will release 1 million barrels of crude oil every day for the next six months from its Strategic Petroleum Reserve, the third time it has tapped the emergency stash in the last six months. The new SPR injection will equate to about 180 million barrels in total by the time it ends in the fall.
While the extra oil should temper the market, and matches US oil imports from Russia, Biden's SPR release is equal to just about two days of global demand. It falls short of the 3 million barrels per day or so of Russian oil estimated to be lost to global markets from sanctions.
The member countries of the IEA meet Friday at 8 a.m. ET to discuss a release of emergency reserves. It's probable further barrels will come to the market and ease the acute supply shortage, Fritsch said.
Biden has also called on oil companies to step up production by drilling more, and has asked Congress to approve a "use-it-or-lose-it" policy for wells on public land that may have been sitting unused for years.
On Thursday, OPEC and its allies including Russia agreed to a modest increase in oil production in May, by an additional 430,000 barrels per day.
"Though this is somewhat more than in the preceding months, it is in line with last summer's agreement," Fritsch said.
The group has defied many calls from the US and IEA to pump more crude in order to cool prices that soared to decade-highs after Western sanctions imposed on Russia over its invasion of Ukraine.
OPEC has decided to ditch the IEA from its list of trusted data sources, Reuters reported. The oil producer group has chosen to replace the agency's data with reports from consultancies Wood Mackenzie and Rystad Energy.