NEW YORK/LONDON: Oil prices tumbled more than five per cent on Wednesday on worries about a demand hit as central banks shift monetary policies and wealthy governments move ahead with emergency crude stockpile releases.

Brent oil futures for June delivery fell 5.2pc to $101.07 per barrel, while West Texas Intermediate for delivery in May slid 5.6pc

Oil futures fell sharply following a surprising rise in US crude stocks and after large consuming nations said they would release oil from reserves in conjunction with the United States to counter tightening supply.

Member states of the International Energy Agency (IEA) will release 120 million barrels from strategic reserves, including 60 million from the United States, according to two sources familiar with the matter. That US 60 million commitment is part of Washington’s previously announced plans to release a million barrels a day for the next six months for a rough total of 180 million barrels.

This is the second time the IEA, which includes big consumers like Japan, France and South Korea, has released barrels from its reserves this year. The group collectively has about 1.5 billion barrels in strategic reserves.

Crude markets have been through weeks of volatility, with prices surging on supply concerns after Russia’s invasion of Ukraine and subsequent sanctions on Moscow by the United States and its allies.

Lately the market has been pulling back following reserve releases along with worries of slowing demand in China, where a resurgent pandemic has prompted lockdowns of cities including Shanghai.

US crude stocks rose by 2.4 million barrels in the latest week, the US Energy Infor­m­ation Administration said, while analysts had expected a drawdown.

Published in Dawn, April 7th, 2022