London (AFP) - Oil prices tumbled Thursday on reports that the United States is considering tapping reserves to combat a supply crisis sparked by the Ukraine war.
London's Brent crude and New York's WTI both dived around six percent, also ahead of an output decision from OPEC and fellow oil producers including Russia.
Equities struggled to build on the week's rally after Russia poured cold water on hopes that ceasefire talks with Ukraine were progressing, leaving the prospect of a protracted war.
Energy majors, like Britain's BP and France's TotalEnergies, saw their share prices drop as lower crude prices bites into revenues and profits.
"Oil prices are under considerable pressure...on news that the US government is planning a massive release of oil," said Commerzbank analyst Carsten Fritsch.
US President Joe Biden is reportedly looking at releasing a million barrels a day for several months -- totalling up to 180 million -- as he tries to temper a conflict-fuelled price surge.
Eyes on OPEC
The OPEC cartel and Russia-led partners hold a monthly meeting Thursday when they are expected to refrain from lifting output by more than previously planned, ignoring Western calls for a significant increase.
AJ Bell analyst Russ Mould downplayed the impact of the possible release in US reserves.
"A speculated release of one million barrels of oil per day over the coming months has to be seen in the context of total global output of around 100 million barrels per day," Mould noted.
"Really this is tinkering at the margins.What might put more of a brake on prices is action by OPEC."
The Ukraine war has already sent shockwaves through the world economy, with growth forecasts this year being lowered across the board.
The European development bank, EBRD, forecast gross domestic product in Russia and Ukraine would shrink 10 percent and 20 percent respectively this year.
London stocks dipped Thursday as data showed that the UK economy rebounded slightly less than initially thought last year and ahead of a far tougher 2022 on fallout from the Ukraine war and rampant inflation.
Asian equities fell Thursday after three days of healthy gains and following comments from Russian officials playing down progress in talks with Ukraine over the ceasefire.
Adding to selling pressure was data showing signs of a further slowdown in China's manufacturing sector caused by Covid lockdowns around the country, including in Shanghai.
Key figures around 1130 GMT
Brent North Sea crude: DOWN 5.9 percent at $106.79 per barrel
West Texas Intermediate: DOWN 6.0 percent at $101.39 per barrel
London - FTSE 100: DOWN 0.2 percent at 7,562.22 points
Frankfurt - DAX: DOWN 0.2 percent at 14,571.51
Paris - CAC 40: DOWN 0.4 percent at 6,714.75
EURO STOXX 50: DOWN 0.5 percent at 3,940.01
Tokyo - Nikkei 225: DOWN 0.7 percent at 27,821.43 (close)
Hong Kong - Hang Seng Index: DOWN 1.1 percent at 21,996.85 (close)
Shanghai - Composite: DOWN 0.4 percent at 3,252.20 (close)
New York - DOW: DOWN 0.2 percent at 35,228.81 (close)
Euro/dollar: DOWN at $1.1105 from $1.1159 late Wednesday
Pound/dollar: DOWN at $1.3124 from $1.3134
Euro/pound: DOWN at 84.60 pence from 84.96 pence
Dollar/yen: UP at 121.94 yen from 121.83 yen
