Brent falls below $100/b as IEA member crude release details emerge

Crude oil futures edged lower midday April 7 with ICE Brent dropping below the $100/b level, as details emerged regarding International Energy Agency members' plans to tap strategic oil reserves.

At 1629 GMT, NYMEX May WTI was down $1.52 at $94.71/b and ICE June Brent was $1.79 lower at $99.28/b.

More details were emerging April 7 surrounding the IEA's pledge for its members to draw 60 million barrels of oil from strategic reserves.

Japan plans to release 15 million barrels of oil from both privately held and national oil petroleum reserves, sources at the Ministry of Economy, Trade and Industry told S&P Global Commodity Insights April 7.

Japan's scale of oil release is the second largest after the US as part of the IEA release, and this would be the country's first oil release of the national oil reserves since it was established in 1978, Kishida told reporters, according to Japanese public broadcaster NHK.

IEA Executive Director Fatih Birol said April 6 that IEA member countries have agreed to release 120 million barrels of oil from storage, which includes 60 million barrels from the US, as part of its overall draw from its strategic petroleum reserve.

Front-month ICE Brent last traded below $100/b on March 17, and last settled below that level on March 16.

NYMEX May RBOB was down 3.92 cents at $3.0070/gal and May ULSD was 13.09 cents lower at $3.2143/gal.

"The market is living headline to headline," Price Futures Group market analyst Phil Flynn said, "the preponderance of which have been bearish in recent days."

"Big picture, this is probably just a correction in a bull market and people are readjusting. I don't think the top is in for oil by any stretch."

Analysts also pointed to recent weakness in financial markets as a potential bearish driver in the oil complex.

Financial markets have been on shaky ground this week as US Federal Reserve officials called for an aggressive tightening of monetary policy in the months ahead to waylay rising inflation. This has stirred fears of a hard landing that could send the economy into recession.

The latest minutes of the Federal Reserve April 6 showed several Fed officials supporting raising interest rates by half a percentage point at least once in the future, while also reducing its swollen balance sheet by $95 billion per month.

"In addition to the enormous global reserves release, demand destruction and recession are currently the only price-lowering mechanism in a world devoid of inventory buffers," said SPI Asset Management's Managing Partner Stephen Innes in an April 7 note.

"Some folks checked one or both of those boxes overnight with recessionary smoke signals dotting the horizon," he added.