Oil prices today: Oil prices drop more than $5 a barrel as Biden weighs massive release of reserves

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Oil futures plunged more than $5 a barrel on Thursday morning following news that the Biden administration plans to release about 1 million barrels of oil a day from strategic reserves for several months in the aim of calming the surge in crude oil prices.

Brent crude futures were down $4.71, or 4.2%, at $108.58 a barrel and US West Texas Intermediate futures were down $5.45, or 5%, at $102.74 a barrel at 0035 GMT.

The Biden administration will make remarks later Thursday where it is expected to announce the plan, aimed at lowering gasoline prices that hit record highs after Russia invaded Ukraine. Prices had stabilized at around 3% on Wednesday, due to supply problems as peace talks between Russia – which calls its actions a “special operation” – and Ukraine appeared to have stalled.

“It’s a sentimental shock, but if recent history is any indication, releasing the reserve will only be a temporary fix and akin to putting a bandage on a broken leg,” said Stephen Innes, partner Director at SPI Asset Management.

In early March, the Biden administration announced it would release 30 million barrels of its strategic reserves as part of a global release of 60 million barrels in an effort to lower prices.

The release comes as US oil inventories fell 3.4 million barrels in the week to March 25, beating forecasts for a 1 million barrel drop, but implied demand for gasoline and of distillates has also decreased.

An apparent slowdown in demand came as U.S. production rose 100,000 barrels per day to 11.7 million bpd after stagnating at 11.6 million bpd since early February.

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