By Adedapo Adesanya
The price of crude oil continued its southwards trajectory as it plunged by more than 4 per cent on Wednesday as large consuming nations moved to release the commodity from their reserves to counter supply worries.
Brent crude plunged 4.57 per cent or $4.87 to close at $101.8 per barrel as the United States West Texas Intermediate (WTI) declined by 4.89 per cent or $4.99 to sell for $96.97 a barrel.
According to reports, members of the International Energy Agency (IEA) agreed to release 120 million barrels of crude oil, though 60 million barrels of that 120 million have already been accounted for as part of the 180 million barrel SPR release that the US Department of Energy made last week.
Between the IEA and the United States, 240 million barrels of crude oil are set to be released from the world’s strategic energy stores.
In the US, the first 90 million barrels of the 180 million set to be released from the Strategic Petroleum Reserve will be released between May and July, the DoE said on Monday, through two notices of sale totalling 70 million barrels, plus 20 million barrels set to be released in May.
The second half of the 180 million barrels is set to be released between August and October of this year.
The IEA had agreed on March 1 to release 62 million barrels of crude from their collective stockpiles. Before this year, the IEA last released reserves in 2011.
Prices also saw pressure as the US Federal Reserve said that it would raise rates by less than it had originally planned.
Also, the US Energy Information Administration (EIA) reported an inventory increase of 2.4 million barrels for the week to April 1 compared with a draw of 3.4 million barrels for the previous week.
A day earlier, the American Petroleum Institute (API) reported an estimated crude oil inventory build of 1.56 million barrels.
Demand worries also mounted after authorities in top oil importer China extended a lockdown in Shanghai to cover all of the financial centre’s 26 million people.
The market will be looking out for a semblance of bullish news and this may come as the US and allies on Wednesday prepared new sanctions on Moscow over civilian killings in northern Ukraine.
Documents show member states of the European Union (EU) have proposed sanctions that would ban buying Russian coal and prevent Russian ships from entering EU ports.
However, all the 27 members must agree and the bloc is also working on additional sanctions, including on oil imports.
Britain also urged G7 and the North Atlantic Treaty Organisation (NATO) nations to agree on a timetable to phase out oil and gas imports from Russia.
Modupe Gbadeyanka