Oil inventories are under watch today as the price of crude oil weakens.
Today’s drop comes as President Joe Biden plans to release a record amount of oil from US strategic reserves. At a press conference later today, Biden could announce that he is authorizing the release of 1 million barrels a day from America’s strategic oil reserves. Over time, it could authorize the release of up to 180 million barrels.
This news drove the price of oil down today and with it, oil stocks are experiencing high volatility. This includes Exxon Mobil (NYSE:XOM), Devon Energy (NYSE:NDV) and Imperial Oil (NASDAQ:IMPP), all of which were down before cutting losses.
The price of West Texas Intermediate (WTI) crude oil, the US benchmark, is now at $103.80 a barrel, while Brent crude, the international benchmark, is at $108.30.
What happened with oil stocks
Later in the day, Biden is due to comment on gas prices, which continue to rise at the pumps. Since Russia first invaded Ukraine in late February, the US price of regular gasoline has hit an all-time high of $4.33 a gallon.
Now, Biden plans to remedy those high prices. Investors should note that earlier in March he announced a coordinated release of oil from reserves in conjunction with other countries. It also released 50 million barrels of oil from strategic reserves last November, which at the time was the largest release of reserves in US history. To release 1 million barrels per day for an extended period would be an unprecedented move.
why is it important
US reserves are a stockpile of 600 million barrels of crude oil that are stored in underground salt caverns in Louisiana and Texas. Analysts say the release of oil from reserves has only a limited impact on gas prices at the pump.
The news that the White House is considering a major oil release comes as OPEC+ is expected to announce that it is maintaining its current production targets and incremental increases, despite global supply constraints due to the ongoing invasion of Ukraine. The Biden administration has pressured OPEC+ to increase production more dramatically.
We will have a full picture of the plan to release more oil into the market later today. However, oil prices and stocks are under scrutiny in anticipation that the White House plans to flood the market with more supply to lower prices at the gas pump and help consumers struggling with inflation. which reached its highest level in 40 years.
As of the date of publication, Joel Baglole had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.