Biden thinks about releasing oil from the US reserve 0:43
London (CNN Business) --
Oil prices are retreating rapidly as investors prepare for the White House to release a record amount of crude oil from US stockpiles in an attempt to relieve pressure on gas stations following the Russian invasion. from Ukraine.
What's happening: President Joe Biden is weighing a plan to release about a million barrels a day for several months.
The announcement could come as soon as Thursday, according to a person familiar with the deliberations.
Brent crude futures, the global benchmark, fell 6% at market opening, falling below $107 a barrel.
US oil was last trading near $102 a barrel.
Biden Announces Historic Release of Oil Stockpiles and Other Measures to Lower Gas Prices
Prices have also fallen recently due to expectations of lower demand from China, one of the main importers, as the country puts new restrictions in big cities like Shanghai to fight the spread of covid-19.
After breaking above $139 a barrel in early March, Brent futures have pulled back sharply.
They are now more than 20% below that level.
The additional supply and reduced demand should be a recipe for prices to fall further in the short term.
But there is skepticism that the use of strategic reserves will change the underlying dynamics of the market in the long term.
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"Conceptually, such a release would help the oil market," Goldman Sachs strategist Damien Courvalin told clients on Thursday.
"This would still be a release of oil inventories, however, not a persistent source of supply for years to come."
Media reports indicate that the United States could eventually release 180 million barrels of oil from reserves stored in underground salt caverns in Louisiana and Texas.
That would be more than three times the size of the release that the Biden administration had announced in November.
Another release was coordinated with the allies earlier this month.
But even that would not be enough to offset the loss of Russian crude, as many traders turn away from sanctions and the logistics of picking up shipments near a war zone.
According to the International Energy Agency, Russian production could fall by 3 million barrels per day in April.
That means additional US supply would only replace a third of Russia's lost output.
Why does the price of gasoline skyrocket in the United States if it uses little Russian oil?
The Organization of the Petroleum Exporting Countries (OPEC) does not appear to be coming to the rescue.
The group, which is meeting with allied producers including Russia on Thursday, is not expected to increase supply beyond its current plans, although Saudi Arabia and the United Arab Emirates could in theory.
It's complicated: Russian crude has not completely disappeared from the market.
Bloomberg reports that Russia is offering to directly sell crude oil to India at a deep discount.
And my CNN Business colleague Matt Egan reports that Russian energy continues to attract interest from potential shadow buyers as tankers turn off their trackers to avoid detection.
But analysts are skeptical that the deep-seated factors driving up oil prices will improve.
That will continue to drive prices higher in the long run.
"The release of a million barrels of oil a day by the US is unlikely to offset the loss of Russian supply and fail to drive prices down sustainably," ING strategists said on Thursday.
Petroleum