WTI choppy in low $100s, clings to large intra-day losses after US SPR announcement

• Oil markets continue to trade in choppy fashion and with large on-the-day losses after the US SPR release announcement.
• 1M BPD will be released for the next six months, keeping the pressure on WTI, which currently trades near $102.
• OPEC+ agreed on a 432K BPD output hike from May, helping keep WTI supported above $100 alongside waning Russo-Ukraine optimism.

Choppy conditions in global oil markets have continued during US trading hours, with prices continuing to trade with sharp on-the-day losses after the White House issued a statement confirming recent speculation regarding a historic crude oil reserve release. The White House said that it would be releasing 1M barrels of crude oil from the Strategic Petroleum Reserve (SPR) every day for the next six months and that it would then restock the SPR once prices are lower. Front-month WTI futures currently trade in the $102.00s, down slightly less than $5 on the day after earlier finding strong support in the $100 area.

Opposition politicians/commentators accused the White House of timing the release specifically to attempt to lower gas prices right before the November mid-term elections and, in doing so, jeopardizing long-term US energy security. Analysts at Goldman Sachs said the move would help the oil market rebalance in 2022, but was cautioned that it wasn’t a permanent fix and “would therefore not resolve the structural supply deficit, years in the making”.

The US SPR release aside, crude oil traders have also had plenty of other themes to monitor on Thursday. As expected, OPEC+ agreed on a 432K barrel per day (BPD) output quota hike from May, resisting continued calls from major oil-importing/consuming nations for the likes of Saudi Arabia and the UAE to lift output at a faster pace. Meanwhile, optimism regarding progress in Russo-Ukraine peace talks has waned a little as Russian attacks have continued and officials expressed skepticism. For now, these two factors seem to be underpinning WTI above the $100 mark.