Oil sees biggest drop in two years as IEA members participate in massive US oil reserve release
Oil fell on Friday as members of the International Energy Agency (IEA) agreed to participate in the largest-ever US oil reserve release.
Both Brent and US crude gauges fell nearly 13% on Thursday, the biggest weekly drop in two years.
Brent crude futures were down 32 cents, or 0.3%, to $104.39 a barrel. West Texas Intermediate (WTI) crude futures were down $1.01, or 1%, to trade at $99.27.
Biden announced the release of 1 million barrels per day (bpd) of crude for six months from May; At 180 million barrels, this is the largest ever release from the US Strategic Petroleum Reserve (SPR).
However, it was said that each country did not agree on quantities or commitments at the emergency meeting of International Energy Agency member states made on Friday. Additional details are expected to be known within the next week.
The Organization of the Petroleum Exporting Countries and its allies, including Russia, adhered to plans for a 432,000-barrel increase in May production target on Thursday, despite Western pressure to increase production.
U.S. energy companies added oil and gas rigs for the second week in a row last week, but rig growth has been slow as drillers choose to pay shareholders cash at higher crude prices rather than increase output.
The US statement does not seem very impressive compared to the reality that 3 million barrels of Russian oil will be withdrawn from the market due to sanctions and buyers' refusal to buy. The market is aware that releasing its oil stocks is not a permanent source of supply. Releases can only provide temporary price reductions.
Shanghai, the commercial hub of China, has signaled a decline in demand after the government placed most of the city's 26 million residents in quarantine in an effort to halt the spread of COVID-19.
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