London, (Business News Report)|| Oil prices witnessed a decline in late trading on Monday, affected by the decision of the International Energy Agency to release large quantities of reserve stocks.
Oil prices fell 4%, bringing the global benchmark Brent to retreat from the level of $100 a barrel.
Also, fears of the Coronavirus pandemic in China, may reduce demand, which contributed to the decline in prices.
The US benchmark, West Texas Intermediate, closed at its lowest level since February 25, the day after the start of the Russian invasion of Ukraine.
Brent contracts ended the trading session as low as $4.30, or 4.2%, to record at a settlement of $98.48 a barrel, the lowest closing level since March 16.
US crude contracts closed down $3.97, or 4.0%, to $94.29.
Demand for fuel in China, the world’s largest oil importer, has been slowed by COVID-19-related shutdowns in Shanghai, the country’s financial hub. The city began easing the closure in some areas on Monday, despite recording a record level of new COVID-19 infections of more than 25,000.
To help offset a shortfall in Russian crude after imposing sanctions on Moscow, IEA member states, including the United States, will release 240 million barrels of strategic oil reserves over the next six months.
Analysts at JPMorgan said that the volumes of withdrawals from the US Strategic Petroleum Reserve were equivalent to 1.3 million barrels per day over the next six months, enough to make up for a shortfall of one million barrels per day in the supply of Russian oil.
Oil prices were subjected to additional pressures from the rise of the US dollar for the eighth consecutive session against a basket of competing currencies. A stronger dollar makes oil more expensive for holders of other currencies.
The IEA approved a new release of oil from emergency reserves of 120 million barrels, the largest in its history, in an attempt to boost supplies.
The agency stressed that during the next six months, about 240 million barrels of oil reserves will be available in emergency situations, equivalent to more than one million barrels per day in the global market.
According to the IEA’s statement issued last Thursday, member states will commit to releasing 120 million barrels of emergency reserves over the next 6 months.
The United States is scheduled to contribute about 60 million barrels, part of the largest withdrawal from the strategic oil reserves, announced on March 31.