Oil prices dropped in early Asian trade on Tuesday as the US government announced plans to sell additional crude from its reserves, offsetting a boost from Russian supply cuts and surging Chinese demand.
At 10:06 AM (Thai time), Brent crude futures had dropped 70 cents, or 81 percent, to $85.91 per barrel, while U.S. crude futures had dropped 93 cents, or 1.1 percent, to $79.21 per barrel.
Following the previous session concluded, the US Department of Energy (DOE) announced that it will sell 26 million barrels of oil from the Strategic Petroleum Reserve (SPR), a release ordered by Congress in prior years.
After US President Joe Biden’s administration sold a record 180 million barrels from the reserve in the prior fiscal year, the DOE contemplated scrapping the fiscal year 2023 sale. But for that to happen, Congress would have had to take action to alter the requirement.
Concerns about supply were also alleviated on Monday, when a cargo of Azeri crude took sail from Turkey’s Ceyhan port, the first since a severe earthquake in the region on Feb. 6.
According to the Energy Information Administration’s (EIA) monthly Drilling Productivity Report released on Monday, U.S. crude oil and natural gas production from the seven largest shale basins is likely to soar to record highs in March.