WTI crude is down 5.6% to $101.80 on the day after Biden weighs up a massive release from the SPR over the coming months. Reports suggest that this could be as much as 180 million barrels, with plans to release roughly 1 million barrels per day.
For some context, the US SPR is already down to 568.3 million barrels after the previous releases in the past six months. That is the lowest since May 2002.
The issue with releasing barrels from the SPR is that in one way or another, they would most likely have to be replaced by oil companies at a later date. It is particularly rare to see outright sales from the reserves itself but then again this is not your typical situation in the oil market and with inflation.
In any case, while the news in itself is hitting oil market sentiment, there are still other factors at play which are more pertinent at the moment.
For one, Russian crude is still off the market due to sanctions and buyers reluctance and the 1 mil bpd "flood" is just helping to partially offset that. Add to the fact that OPEC+ is still not going to change its current stance, it still argues that the long-term outlook for the oil market remains intact. I mean at this stage, the Russia-Ukraine situation looks like it can drag on for quite some time.
If anything else, I would view the latest move by Biden here to be a temporary hit to oil prices - as has been the case with previous releases. Sure, the release this time around is much more significant but it barely scratches the armor when you put it together with the other issues at play. In short, if there is a bigger retracement, it presents another dip-buying opportunity.
From a technical perspective, price is holding above the next key support level at $100 for now though sellers are keeping near-term control as price holds below both the key hourly moving averages:
