Oil Prices Plummet on Diesel Stock Release Talks
Oil prices dropped significantly on Friday after reports emerged of discussions over releasing additional diesel and crude stockpiles to ease concerns about tight global energy supplies. The price of Brent fell by $2.83 (S$3.62) or 2.77%, reaching US$99.48 a barrel at 8:42am GMT, while West Texas Intermediate dropped by $3.35, or 3.61%, to US$89.52 a barrel.
The European gasoil futures benchmark for diesel prices fell more than five percent to US$1,377 a metric ton. Ole Hansen, head of commodity strategy at Saxo Bank, attributed the decline in oil prices to EU countries discussing releasing fuel and crude stockpiles to ease market tightness and prevent a potential US diesel export ban.
The discussion centered around a French proposal to release 50 million barrels of diesel and 50 million barrels of crude oil through International Energy Agency members. Hansen noted that the main stress in the energy market is no longer crude availability, but rather refined product supply, constrained by reduced refinery capacity and output across the Middle East and Russia.