Oil futures dived more than $5 a barrel on Thursday morning on news that the Biden administration is weighing releasing some 1 million barrels of oil per day from strategic reserves for several months in a bid to calm soaring crude prices.

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Brent futures were down $4.71, or 4.2%, to $108.58 a barrel and U.S. West Texas Intermediate futures were down $5.45, or 5%, to $102.74 a barrel at 0035 GMT.

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The Biden administration will give remarks later on Thursday where he is expected to announce the plan, aimed at lowering gasoline prices that have hit record levels following Russia`s invasion of Ukraine. Prices had settled up around 3% on Wednesday, driven by supply concerns as peace talks between Russia - which calls its actions a "special operation" - and Ukraine appeared to have stalled.

It`s a sentiment shock, but if recent history suggests anything the reserve release will only be a temporary fix and akin to putting a band-aid on a broken leg," said Stephen Innes, Managing Partner at SPI Asset Management.

In early March, the Biden administration said it would release 30 million barrels from its strategic reserves as part of a global release of 60 million barrels in a bid to lower prices.

The release comes as U.S. oil stocks fell by 3.4 million barrels in the week to March 25, surpassing forecasts of a 1 million barrel drop, but implied demand for gasoline and distillates also declined.

An apparent slowing of demand came as U.S. production rose by 100,000 barrels per day to 11.7 million bpd after stagnating at 11.6 million bpd since early February.