Oil Prices Under Pressure as Strategic Reserve Releases Target Diesel

Key Facts

1Oil prices are under pressure due to plans for additional coordinated releases from strategic reserves.

2Middle distillate cracks have weakened as the planned releases are set to include diesel.

Oil prices are under downward pressure following coordinated plans for additional releases from strategic reserves, according to ING. The firm reported that middle distillate refinery margins have weakened as the planned releases are set to include diesel supplies, increasing market expectations for improved availability.

The pressure follows an agreement by G7 nations to release 100 million barrels of oil in coordination with the IEA, with the release period starting immediately and lasting four months. This supply-side intervention has compressed refinery cracks, while positioning data indicates that speculators have reduced their net long positions in ICE Brent to the lowest levels seen since early August.