Oil prices fell heavily on both major benchmarks this morning, following reports the US is considering the release of up to 180m barrels from its strategic petroleum reserve.
Brent Crude nosedived 5.51 per cent to $107.20 per barrel while WTI Crude slipped 5.10 per cent to $102.30.
The May contract expires today, and the most actively traded June futures were down 4.1 per cent at $106.90.
The release comes as commercial oil inventories in the US fell by 3.4m barrels in the week to March 25, surpassing forecasts of a one million barrel drop.
US President Joe Biden is desperate to drive down oil prices to ease financial pressures on US consumers ahead of the mid-term elections this November.
Later today, he is expected to outline actions aimed at lowering petrol prices which have soared to record levels following Russia’s invasion of Ukraine.
Craig Erlam, senior market analyst at OANDA, said: “At a time of extreme tightness in the oil market, when Russian exports are being disrupted as a result of Western sanctions, the move is very welcome. The timing is, I’m sure, no coincidence either coming in the months leading up to the midterms later this year as Biden seeks to protect his slim majorities in congress.”
OPEC+ sticks to output targets
Oil prices could rise again over the coming days, with markets increasingly influenced by highly volatile geopolitical factors.
In particular, investors are increasingly concerned about potential supply shortages.
OPEC+ stuck to previously agreed plans to gradually increase oil production today in a meeting between its members.
It has maintained its modest commitment to raising output in May by extra 432,000 barrels per day.
Meanwhile, the joint technical committee which advises OPEC+ has decided to stop using International Energy Agency (IEA) data.
It will instead use reports from Wood Mackenzie and Rystad Energy.
The IEA advises Western governments on energy policy, and the US is one of its top financiers.
The group has pushed OPEC+ to boost oil production to meet growing demand, with the OPEC+ persistently failing to meet raised targets this year, contributing to tight markets.
Calls for more supplies from the UK and US have fallen on deaf ears, with OPEC+ determined to also remain neutral in the Ukrainian conflict following Russia’s invasion last month.
In response, the IEA has announced it will make its data available to everyone.
“IEA data and analysis remain available to all those seeking rigorous and objective market information. To support transparency, the IEA will henceforth make its monthly update on OPEC+ oil production available to the public,” the IEA told Reuters in a statement.