Oil Prices Drop as EU Agrees to Release Diesel Reserves

Oil prices settled lower on Friday after European leaders agreed to release diesel reserves in an effort to lower fuel costs and reduce imports from the US. The move was requested by President Donald Trump, who had previously considered imposing a ban on US diesel exports.

Brent crude futures finished down 6 cents, or 0.06 percent, at $102.25 a barrel, while West Texas Intermediate (WTI) settled down $1.76, or 1.90 percent, at $91.11 a barrel. For the week, Brent was up 0.11 percent, while WTI was 1.6 percent lower.

The European Union agreed to release an additional 50 million barrels of diesel and 50 million barrels of crude oil, as proposed by France, in an effort to ease fuel shortages. The move is expected to help reduce the impact of reduced refinery capacity and output in the Middle East and Russia.

Analysts noted that the main stress in the energy market has shifted from crude availability to refined product supply. 'This highlights that the main stress in the energy market is no longer crude availability, with Middle East flows recovering, but rather refined product supply, constrained by reduced refinery capacity and output across the Middle East and Russia,' said Ole Hansen, head of commodity strategy at Saxo Bank.