Workers walk as oil pumps are seen in the background in the Uzen oil and gas field in the Mangistau Region of Kazakhstan November 13, 2021.
Workers walk as oil pumps are seen in the background in the Uzen oil and gas field in the Mangistau Region of Kazakhstan November 13, 2021. Reuters / PAVEL MIKHEYEV

Oil prices fell about $1 on Friday, ahead of a meeting of consuming nations to discuss a new release of emergency oil reserves alongside a huge planned release by the United States.

U.S. West Texas Intermediate (WTI) crude futures were down $1.02 at $99.26 a barrel by 0629 GMT, after trading as high as $101.75. The contract slumped 7% on Thursday.

Brent crude futures slid by 79 cents to $103.92 a barrel, after dropping 5.6% on Thursday. The May contract expired on Thursday at $107.91.

The planned U.S. release caused Thursday's falls. On Friday the two benchmark contracts were headed for a weekly loss of 13% to 14%, their biggest in two years.

Member nations of the International Energy Agency (IEA) will meet at 1200 GMT on Friday to discuss a further emergency oil release that would follow their March 1 agreement to release about 60 million barrels.

On Thursday, U.S. President Joe Biden announced a release of 1 million barrels per day for six months, starting in May. That will be the largest release ever from the U.S. Strategic Petroleum Reserve (SPR).

The aim is to make up for disrupted oil supplies from Russia, hit by sanctions following its invasion of Ukraine, which Moscow calls a "special operation" to disarm its western neighbour.

Oil prices could reverse course, however, if the release is scaled back or delayed or if delivered volumes are less than those mentioned by the White House, consultancy Eurasia Group said in a note.

Traders are waiting to see how much oil the IEA countries agree to release but do not expect it to have much long-term effect on the market.

"Its impact will be limited, as it is unlikely to be anything near the scale of the U.S. announcement," said OANDA senior analyst Jeffrey Halley.

"Previous releases from the SPR have taken time to reach the market and have had little impact on prices," ANZ Research analysts said in a note.

While Biden called for U.S. producers to step up output, ANZ analysts said the massive SPR release could actually backfire and discourage producers from drilling more.

"The scale of the proposed release is large enough to mostly, or even completely, fill the supply deficit in the crude oil market for a period," Commonwealth Bank commodities analyst Tobin Gorey said.

"The action would likely cap prices for that period, after which the market would then be relying on OPEC+ to increase production."

The Organization of the Petroleum Exporting Countries and allies including Russia, together called OPEC+, stuck to plans to add a modest 432,000 barrels per day of supply in May, despite Western pressure on Saudi Arabia and the United Arab Emirates to use their spare capacity to boost output further.

China's widening lockdowns are contributing to concerns of falling fuel demand, said Tina Teng, an analyst at CMC Markets.

Late on Thursday the commercial hub of Shanghai extended a lockdown in its eastern districts, while the western portions shut down as scheduled.