OIL FUTURES: Crude stabilizes ahead of IEA meeting to discuss SPR release

Crude futures were stable in late-morning Europe trade on April 1 with the International Energy Agency set to meet following the announcement of a record US strategic petroleum reserve release March 31.

At 11:37 am GMT, June ICE Brent futures were up $0.11 at $104.82/b, while June NYMEX WTI futures were down $0.24 /b at $100.15/b.

Prices had dropped sharply on news that the US would release about 180 million barrels from the country's strategic oil reserves between May and October. The increase is intended to stem volatility while the US production ramps up.

The IEA will meet April 1 to discuss an additional coordinated release of reserves among member nations.

Analysts were initially skeptical about the SPR release alone providing long-term relief to market volatility. The underlying crude supply picture remains tight with low inventories and spare global capacity seen at just 1.4 million b/d by June, according to data from S&P Global Commodity Insights.

"Ultimately, whether the SPR release is enough will depend on how large and prolonged disruptions to Russian oil supply are due to self-sanctioning. We are assuming that Russian supply will be 2 million b/d lower for the remainder of this year due to self-sanctioning. Clearly, under such a scenario the SPR release falls short," Warren Patterson, head of commodities strategy at ING said.

OPEC+ agreed to a slight monthly output increase March 31. OPEC and its allies plan to increase output by 432,000 b/d in May, a modest rise from the previous monthly increases of 400,000 b/d. OPEC's next meeting is scheduled for May 5.

The increase was in line with the group's summer 2021 agreement and came as little surprise to the market despite calls from consuming countries for greater output hikes. OPEC+ have also stopped sourcing IEA data for use in its output decisions, setting up a potential confrontation.