Oil prices tumble on reports U.S. will release reserves, as OPEC meeting looms

Oil prices tumble on reports U.S. will release reserves, as OPEC meeting looms

Oil prices slumped early Thursday, as traders absorbed reports that the U.S. is planning a hefty release of crude reserves, hours ahead of an OPEC+ meeting outcome.

Price action
  • West Texas Intermediate crude for May delivery 
    CL.1,
    -4.97%

    CL00,
    -4.97%

    CLK22,
    -4.97%

    fell $4.67, or 4.3%, to $103.09 a barrel. The contract climbed 3.4% on Wednesday to settle at $107.82 a barrel on the New York Mercantile Exchange.

  • May Brent crude 
    BRN00,
    -3.98%

    BRNK22,
    -3.99%
    ,
     the global benchmark, fell $3.67, or 3.3%, to $107.76 a barrel, a day after rising 2.9% to $113.45 a barrel on ICE Futures Europe.

  • May natural gas 
    NGK22,
    -1.25%

    fell 1% to $5.55 per million British thermal units.

  • April gasoline 
    RBJ22,
    -4.66%

    slumped 4.6% to $3.17 a gallon, following a 3.8% climb to $3.325 a gallon a day earlier. April heating oil 
    HOJ22,
    -2.59%

     fell 2.6% to $3.71 a gallon, after a 2.5% gain to $3.809 a gallon.

Market drivers

President Joe Biden is poised to order up to 1 million barrels of oil per day released from the nation’s strategic petroleum reserve (SPR), the Associated Press reported late Wednesday, citing sources.

That announcement may come on Thursday when Biden is expected to deliver remarks on his administration’s plans to battle higher gas prices, and help counter the loss of Russian oil on the market. The country has been under heavy sanctions since its invasion of Ukraine more than a month ago.

The report said any SPR release could last for months.

“First, the US has had little success in persuading OPEC members to increase output. Second, any expansion in US supply to global markets that hits the oil price will only be sustained once Ukraine and Russia are close to striking a ceasefire deal,” Stephen Innes, managing partner at SPI Asset Management, in a note to clients.

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A decision from OPEC+ — the Organization of the Petroleum Exporting Countries and its allies, including Russia — is due Thursday. Analysts largely expect the oil cartel and its partners will abide by a plan to boost production by another 400,000 barrels a day in May.

Oil prices rose Wednesday amid confusing signals about progress between Russian and Ukraine negotiators, as the fighting dragged on in the brutal conflict that began more than a month ago.

“The Kremlin reported no breakthrough in peace talks, while Ukraine says Russia is deploying reinforcements, dashing hopes for an end to the war,” said Innes.

War in Ukraine:  Zelenskyy says defense of his country is at a ‘turning point’ as Russian attacks intensify

Elsewhere, Russia is reportedly offering hefty discounts of its oil to India, amid sagging demand due to those sanctions, Bloomberg reported on Thursday, citing sources.

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