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Oil Retreats as U.S. Weighs Reserves Release to Combat Inflation -Breaking

by Mike Robinson

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© Reuters. As the U.S. releases its reserves to combat inflation, oil prices fall

(Bloomberg) — Oil retreated on signs the U.S. is considering tapping its reserves in a potentially massive release to tackle rising inflation following Russia’s invasion of Ukraine.

West Texas Intermediate futures fell 5% and traded at $102 per barrel. This trimmed a monthly increase. People familiar with this matter say that the Biden administration contemplates releasing approximately 1 million barrels of oil per day over several months. People said that the total oil release could reach 180 million barrels.

This news is coming ahead of an OPEC+ Supply Meeting later Thursday. However, the cartel will likely stick to its strategy of a slight output increase in May at the routine catch up on Thursday. After being asked to pump more, Saudi Arabia and United Arab Emirates stated this week that they trust the U.S. approach to managing markets.

See also: Oil Market Sees a Decade’s Worth of Volatility in Five Weeks

Oil markets have been tight since before the invasion of Ukraine. Now, reduced Russian flows have made it even more difficult. Inflation has been stoked by the invasion, which led to extreme volatility in commodity markets. This month’s global benchmark was set at the highest trading range ever recorded.

A Bloomberg survey indicates that OPEC+ would ratify a May production rise of 432,000 barrels per day. After Russia invaded neighboring countries, the last meeting of the alliance to discuss supply policy was completed in record time by the group in 13 minutes. Despite all diplomatic efforts to end the war, it continues.

China is tackling its most severe virus epidemic since Wuhan in the beginning of the pandemic. This could lead to a decline in market demand. A series of locks were initiated by China, which also included a delayed shutdown of Shanghai’s commercial and financial hub.

As fuel prices rise, record U.S. gasoline prices could be hurting consumer consumption. The Energy Information Administration reports that U.S. gasoline demand declined for the third consecutive week. This is in direct contradiction to seasonal trends.

©2022 Bloomberg L.P.

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