Oil heads for weekly decline as U.S. plans huge reserve release
BNN Bloomberg
Oil headed for the biggest weekly loss in almost two years after the Biden administration ordered an unprecedented release of U.S. strategic reserves to tame rampant prices.
Oil headed for the biggest weekly loss in almost two years after the Biden administration ordered an unprecedented release of U.S. strategic reserves to tame rampant prices.
West Texas Intermediate futures swung between gains and losses Friday, and were down about 13 per cent this week, the most since April 2020. The U.S. plans to release 1 million barrels a day for six months, and President Joe Biden said he also expects allies will agree to release more oil from their own reserves.
Citigroup Inc. said the U.S. 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 2023, arguing that the move won’t fix a longer-term supply crisis.
Biden’s decision follows rocketing gasoline prices in America 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 March. WTI traded in almost a US$37 range last month.
The Biden administration’s giant oil release puts it in stark contrast with OPEC+, which on Thursday ratified a planned, modest production increase of about 430,000 barrels a day in record time.
