Oil posted its biggest weekly loss in more than 10 years after the administration of US President Joe Biden ordered a release of US strategic reserves.
West Texas Intermediate (WTI) dropped 1 percent on Friday and more than US$14 this week, the most since 2011.
WTI was US$99.27 per barrel, down 12.8 percent for the week.
Photo: Reuters
The US plans to release 1 million barrels a day for six months.
International Energy Agency nations also agreed to release another round of crude stockpiles, with volumes to be decided later.
Biden expects allies to release an additional 30 million to 50 million barrels.
Citigroup Inc said that the US appeared to have taken steps to ensure that it could deliver the promised volumes, despite having never drawn down that much oil from the reserve stockpile.
Goldman Sachs Group Inc cut its price forecasts for this year, but boosted the estimate for next year, arguing that the move would not fix a longer-term supply crisis.
Releasing 1 million barrels a day from the US Strategic Petroleum Reserve “can easily be accomplished,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston, Texas.
Biden’s decision follows rocketing gasoline prices in the US and concerns about supply shortages following Russia’s invasion of Ukraine.
The war has roiled global commodity markets and driven up the price of everything from fuels to food.
It has also led to tumultuous trading in oil, with massive intraday swings throughout last month.
WTI traded in almost a US$37 range last month.
The US already tapped its reserves twice in the past six months, but that has done little to cool prices.
As much as 180 million barrels might be released this time.
“The market is short about 2 million barrels a day, if not more, from Russian supplies into the global market,” US Department of State energy security adviser Amos Hochstein said in an interview on Bloomberg Television.
The Biden administration’s giant oil release contrasts sharply with OPEC+, which on Thursday ratified a planned, modest production increase of about 430,000 barrels a day.
Also contributing to this week’s slide were concerns about Chinese demand as the world’s biggest oil importer implements a series of lockdowns to curb a resurgence of COVID-19.
Those curbs are starting to affect the Chinese economy, with manufacturing activity contracting last month.
Additional reporting by staff writer
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