Oil prices fell 7% to close just above $100 on Thursday as President Joe Biden announced the largest ever release from the U.S. Strategic Petroleum Reserve and called on oil companies to increase drilling to boost supply.
U.S. West Texas Intermediate futures for May delivery settled down $7.54, or 7%, at $100.28 a barrel, after touching a low of $99.66.
Brent crude futures for May, which expired on Thursday, closed down $5.54, or 4.8%, at $107.91 a barrel. The more actively traded June futures were down 5.6% at $105.16, after falling by $7 earlier in the session.
Both benchmarks posted their highest quarterly percentage gains since the second quarter of 2020, with Brent soaring 38% and WTI gaining 34%, boosted mainly after Russia’s Feb. 24 invasion of Ukraine which Moscow calls a “special operation.”
“This is a market where every barrel counts and (the SPR release) is a significant volume of oil to be put on the market for an extended period of time,” said John Kilduff, a partner at Again Capital LLC.
Biden’s 180 million-barrel release is equivalent to about two days of global demand, and marks the third time Washington has tapped the SPR in the past six months.
Starting in May, the United States will release 1 million barrels per day of crude oil for six months from the Strategic Petroleum Reserve, Biden said, adding that 30 million to 50 million barrels of oil could be released in addition by allies and partners.
“We need to increase supply… Oil firms sitting on idle wells or unused leases will have to start producing or pay for their inaction” he said.
Other members of the International Energy Agency may also release barrels to offset lost Russian exports after that nation was hit with heavy sanctions for its invasion of Ukraine.
IEA member countries are set to meet on Friday at 1200 GMT to decide on a potential collective oil release, a spokesperson for New Zealand’s energy minister said.