Pricing in the oil markets was guided by the news that the U.S. would make new supplies to the demand from its strategic oil reserves.
Oil tumbled as the expectation of additional supply from U.S. strategic reserves eased market tightening concerns.
U.S. crude futures traded at $83. Brent oil is at $90.
The U.S. plans to release more crude oil from its strategic reserve to lower fuel prices.
“Crude prices have dropped as energy investors expect the Biden administration to remain aggressive by supplying more strategic oil reserves. Less than a month into the midterm elections, President Biden wants energy prices to move in the right direction,” said Ed Moya, Oanda Corp Senior Market Analyst.
Crude oil points to tightness before OPEC+ output cuts kick in next month, but bearish factors such as weak Chinese demand and aggressive monetary policy from central banks continue to weigh on the market.
Prices have fallen by about a third since June, erasing all gains made after Russia invaded Ukraine in late February. E.U. sanctions on Moscow’s oil trade will come into effect in December, prompting refineries to reserve storage tanks in anticipation of supply shortages.
