Crude declines on reports of Biden announcing SPR release today

Front-month ICE Brent has decreased by $1.08/bbl on the day, to $90.03/bbl at 09.00 GMT.

PHOTO: CNBC has reported that US President Joe Biden plans to announce a 15 million bbls SPR release today. Getty Images

Upward pressure:

While a strategic petroleum reserve (SPR) release is likely to weigh on Brent in the near term, depleting these emergency stocks could restrain the US government's ability to influence the global supply-demand balance in the future.

"Draining our emergency supplies is a short-sighted and dangerous choice that imperils our energy security at a critical time of global uncertainty," US senator Jerry Moran commented on President Joe Biden's possible SPR release to lower oil prices.

According to US government data, SPRs have declined to 405 million bbls so far this year, which is down from 593 million bbls at the start of the year. This is the slimmest these inventories have been since June 1984.

Downward pressure:

CNBC has reported that President Biden plans to announce the release of another 15 million bbls of crude from SPRs today to lower oil prices.

Amrita Sen of Energy Aspects has told CNBC that the US could be weighing an emergency release of as much as 100 million bbls. She added that the oil market is “really worried” that a big SPR release will “flood the market” and push prices down.

Demand concerns from China may also add downward pressure. China has delayed releasing economic data, including its third-quarter GDP numbers, with no rescheduled date for the data to be released in the midst of the ongoing party congress.

A CNN report has said that Fitch is concerned that high inflation and the Federal Reserve's "jumbo-sized" interest rate hikes may trigger a mild recession similar to the 1990s in the US. The US is the world's biggest oil consumer.

By Shilpa Sharma and Konica Bhatt

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