Cannot Release Lock on SharePoint Online File

Locks is a complex topic and technically a client or network issue. SharePoint supports co-authoring locks unless you have Check In/Out enabled on the library. Client side locks will occur if Office cannot negotiate a co-author lock falling back to an exclusive lock. As others have pointed out, the upload center can contribute to locking and is one of the first things you should check. You can trace the calls via Fiddler on the client.

This is the technical explanation from PSS:

When a user attempts to open an Office file hosted on SharePoint in the Office client, there is an expected set of network calls we should be seeing unless there is a problem. Once a user clicks that Office file to open in client, code on the SharePoint page and (if using Internet Explorer) the Office 365 browser addon sends a command to initialize the client application (Word, Excel, PowerPoint). Once the Office client application starts launching, Office will start a HTTP conversation with SharePoint. If the Office call is already authenticated, the Office will be returned the file content. However, if not already authenticated, which is usually expected to be the case, Office will negotiate for Authentication with SharePoint. This process happens through two networking calls called OPTIONS calls. The first OPTIONS call is anonymous and expected to be rejected by SharePoint as to establish what types of authentication SharePoint will accept. The second options call will include the requested authentication information to SharePoint. If SharePoint accepts the second options, call, it will return a METHOD call, identifying what network verbs can be used to communicate with it (OPTIONS, GET, LOCK, PROPFIND, and POST are all examples of verbs for this process). Once the verbs are established the Office client will make a POST network call that requests the metadata for the file, adds the user’s session lock state (coauthor lock or exclusive lock) and to request to open the file from the CellStorage web service in SharePoint. If the Office client has never accessed the document before, the entire document will be downloaded from SharePoint and cached in the Office Document Cache. If the Office client has opened the file before, then it is already cached and only the changes will be downloaded. At this point, the Office file will open in the Office client. This entire process happens between a few milliseconds to a few seconds.