LONDON: Oil prices fell sharply on Thursday, extending losses from the previous session, as the United States said it was considering selling oil from its strategic reserves and as Russia said it was ready to stabilise the natural gas market.
Brent crude prices fell US$1.24, or 1.5per cent, to US$79.84 a barrel by 0918 GMT, after falling to a session low of US$79.08. WTI crude futures fell US$1.69, or 2.2per cent, to US$75.74 a barrel, having hit a session low of US$74.96, report agencies.
“The crude market might be less tight should the United States tap the strategic crude reserves and if Russia manages to send more natural gas to Europe, this might result in less substitution from natural gas to crude,” said UBS analyst Giovanni Staunovo.
U.S. Energy Secretary Jennifer Granholm said on Wednesday that the administration is considering tapping the country’s Strategic Petroleum Reserve (SPR) to cool a surge in gasoline prices, the Financial Times reported.
Granholm also did not rule out a ban on crude exports, which was lifted in 2015.
Goldman Sachs said a likely SPR release, which could be up to 60 million barrels, only posed a US$3 downside risk to its US$90/bbl year-end Brent price forecast.
A larger-than-expected fall in U.S. crude inventories last week also weighed on prices.
Russian President Vladimir Putin said on Wednesday that Russia was boosting gas supplies to Europe, including via Ukraine, in response to the energy crunch and stands ready to stabilise the market amid surging prices.
Such a move could help cool off record high gas prices.