Oil Moves Towards Weekly Decline As US Plans Giant Reserve Release: Bloomberg

Oil is headed for the most significant weekly loss in almost two years after the Biden administration ordered a release of U.S. strategic reserves amid rising crude prices. The West Texas Intermediate futures rose 0.6% Friday.

The U.S. plans to release 1 million barrels a day for six months. President Joe Biden said he expects allies will also agree to release more oil from their reserves.

Related: Biden Administration Mulls Releasing 180M Barrels Of Oil From Strategic Petroleum Reserve.

Citigroup Inc C said the U.S. has taken steps to ensure that it could deliver the promised volumes, despite having never drawn down that much oil before from the reserve stockpile. 

Goldman Sachs Group Inc GS cut its price forecasts for this year but boosted the estimate for 2023, arguing that the move won’t fix a longer-term supply crisis.

The Biden administration’s massive oil release contrasts with OPEC+ planned modest production increase of about 430,000 barrels a day.

“This will ease the acute supply shortage on the oil market,” Commerzbank analyst Carsten Fritsch said. 

WTI for May delivery rose 0.6% to $100.84 a barrel, but prices are down around 11% for the week. Brent for June settlement rose 0.7% to $105.46 and was down 13% for the week.

Early on Friday, the market also came under some technical pressure as WTI breached its 50-day moving average for the first time since early January.