OIL FUTURES: Crude falls as US considers release of strategic petroleum reserves

Crude futures traded lower in mid-morning trade in Europe on March 31 as markets assessed the news of a potential release from the US strategic petroleum reserves.

At 1027 GMT, June ICE Brent futures were down $5.92/b at 105.50/b, while May NYMEX WTI futures were $6.05/b lower at $99.45/b.

Headlines of the Biden administration considering a release of up to 1 million b/d of oil from its strategic petroleum reserve over several months pushed oil prices lower. Some market participants questioned whether this would in fact have a lasting impact.

"If 180 million barrels are released over the next six months and we have an extra 1 million barrels a day it still wouldn't solve things, just postpone them. There needs to be an increase in production to sustainably drive prices lower for longer," said Michael Poulsen from Global Risk Management.

Analysts said the announcement on the potential release of reserves had overshadowed bullish inventory data from the US Energy Information Administration.

The data showed US commercial crude stocks had fallen 3.45 million barrels to 409.95 million barrels in the week to March 25, leaving inventories 14% behind the five-year average for this time of the year and at the lowest outright level since September 2018.

Volatility in crude oil markets continue to be dominated by headlines surrounding progress in Russia-Ukraine talks or lack thereof.

"I think there is a 1:1 one correlation with the news coming out of the Ukrainian situation [and crude prices]. There is a back and forth and even a slight hint in either direction of a result in volatility but the underlying fundamentals haven't changed much," said Poulsen.

A string of meetings and press conferences on March 31 could add to the recent volatility in the crude oil market. Firstly, OPEC+ is set to meet on March 31 but is widely expected to slightly increase their production quotas from an originally-planned 400,000 b/d. "[...] we believe that the most likely scenario is that the extended cartel will decide to raise production further by 430,000 b/d," said Commerzbank in a research note March 31.

Biden will be delivering remarks on energy prices afternoon in the US March 31, according to guidance from the White House.