Oil prices fell sharply to below $107 a barrel on Thursday as the US administration considered releasing crude for several months from their Strategic Petroleum Reserve (SPR).
Soaring crude prices were tempered after supply anxiety drove oil prices higher on Wednesday, tracking a fall in American oil stockpiles putting the focus back on supply disruptions.
The benchmark Brent crude futures were last down over 6 per cent, or nearly $7 a barrel, to trade at $106.8 per barrel. But the volatility was reflected in the trading price range between $106.5 and $112.94.
US West Texas Intermediate futures fell over $6 a barrel to trade last at $101.37 per barrel after earlier slipping to a low of $100.85.
But a Reuters survey of 40 economists and analysts showed oil prices would continue to stay well above $100 this year as a parched market struggles to wean itself off Russian oil.
Brent crude was forecast to average $103.07 a barrel this year, a jump from the previous poll’s $91.15 consensus and the highest 2022 estimate yet in Reuters surveys.
On Wednesday, Brent prices settled 3 per cent higher driven by supply concerns as peace talks to end the war between Russia and Ukraine stalled and on scepticism oil-producing countries, scheduled to meet today, would be able to increase supply.
US President Biden is expected to announce the plan of releasing oil from their massive emergency reserves aimed at lowering gasoline prices that have risen to records following Russia’s invasion of Ukraine.
The move would mark the third time the US has tapped its strategic reserves in the past six months and would be the most significant release in the nearly 50-year history of the SPR.
So far, the US releases have not managed to lower prices as world demand has nearly reached pre-pandemic levels while supply has tightened globally.
Oil prices have surged since Russia invaded Ukraine in late February, and the US and allies responded with hefty sanctions on Russia, the second-largest exporter of crude worldwide.
Brent crude soared to nearly $140 a barrel earlier this month, the highest since the financial crisis in 2008, and has remained above $110 a barrel since Russia invaded Ukraine on February 24.