Oil slips from 7-year high with Biden pledging to tackle prices

Oil slipped from the highest close since 2014 after President Joe Biden pledged to continue trying to lower prices and an industry report pointed to a modest increase in U.S. crude stockpiles.

Futures in London dipped near $88 a barrel after advancing over the past three sessions. While Biden does have some options to address the increase in oil prices, many of them would be limited and likely short-lived. Crude’s rally poses a challenge for consuming nations and central banks as they try and stave off inflation while supporting economic growth.

The American Petroleum Institute reported U.S. crude inventories rose by 1.4 million barrels last week, according to people familiar. That would be the first gain in eight weeks if confirmed by official data later Thursday. It also reported another gain in gasoline stockpiles, which have risen sharply so far this year.

Oil has surged since the end of November as stronger than expected demand and supply outages tightened the market, leading to buyers in Asia paying sharply higher premiums for spot cargoes. Goldman Sachs Group Inc. is forecasting a return to $100 crude in the third quarter, and the International Energy Agency said that demand is on track to hit pre-pandemic levels.

“Underlying fundamentals remain strong as confirmed by the IEA in their monthly report yesterday, but with technical indicators flashing overbought, a period of consolidation may soon emerge,” said Ole Hansen, head of commodities strategy at Saxo Bank. 

Prices

  • West Texas Intermediate for February delivery, which expires Thursday, dipped 0.2 per cent to $86.83 a barrel.
  • The more-active March contract slipped 0.1 per cent to $85.69 a barrel at 10:20 a.m. in London.
  • Brent for March settlement lost 0.4 per cent to $88.11 a barrel
  • The prompt timespread for Brent was 77 cents in backwardation, compared with 70 cents a week earlier.

Biden told reporters on Wednesday that the administration would work on trying to increase supplies that are available, adding that it would be hard. That followed comments on Tuesday that the administration was working with oil-producing countries to ensure supply rises to meet demand. Biden also raised the spectre of sanctions against Russia if it invades Ukraine. 

U.S. gasoline stockpiles increased by 3.46 million barrels last week, according to the API. Nationwide crude inventories are forecast to have dropped by 1.75 million barrels, according to a Bloomberg survey before Energy Information Administration data later Thursday.

© 2022 Bloomberg L.P.

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.