(Bloomberg) -- Oil retreated on signs the U.S. is considering tapping its reserves in a potentially massive release to tackle rising inflation following Russia’s invasion of Ukraine.
West Texas Intermediate futures slid 5% to trade near $102 a barrel, trimming a monthly advance. The Biden administration is weighing a plan to release roughly one million barrels of oil a day for several months, according to people familiar with the matter. The total release may be as much as 180 million barrels, the people said.
The news comes ahead of an OPEC+ supply meeting later Thursday, though the cartel is expected to stick with its strategy of a modest output boost in May at the routine catch-up on Thursday. Saudi Arabia and the United Arab Emirates said this week that the U.S. must trust its approach to managing the market after facing calls to pump more.
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The oil market was tight even before the war in Ukraine, and reduced Russian flows are squeezing it further. The invasion has fanned inflation and led to wild volatility across commodity markets, with global benchmark Brent crude set for the widest trading range on record this month.
OPEC+ is expected to ratify a production increase of 432,000 barrels a day for May, according to a Bloomberg survey. The last time the alliance met to discuss its supply policy -- just days after Russia invaded its neighbor -- the group wrapped up its meeting in a record 13 minutes. The war continues to rage, despite diplomatic efforts for a cease-fire.
The market is also facing the prospect of a hit to demand as China tackles its worst virus outbreak since Wuhan at the start of the pandemic. The country has initiated a series of lockdowns, including a staggered shutdown in the financial and commercial hub of Shanghai.
Record U.S. gasoline prices may be crimping consumption as the cost to fill up tanks soars. U.S. gasoline demand fell for a third consecutive week, according to the Energy Information Administration, defying seasonal trends.
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