The price of oil fell Wednesday following a report that showed gasoline supplies fell more than expected last week, which might increase pressure on the Biden administration to release oil from emergency reserves in order to cap soaring fuel prices. Brent crude futures dropped 0.6%, to trade near $82 a barrel.
As of this week, gasoline prices in California hit a record high at the pump, with President Biden considering releasing oil from the Strategic Petroleum Reserve. However, lawmakers are split on whether it is necessary. The United States is the world’s top oil consumer.
Steny Hoyer, the House majority leader, said late on Tuesday that the CPR was there to fill a crude oil supply gap in emergencies, not to lower gas prices. Senate Majority Leader, Chuck Schumer called for tapping the reserve to lower gas prices on Sunday.
With the holiday season just around the corner, the decrease in gasoline stocks may be due to a rise in travelling demand. That may increase President Biden’s pressure to release the Strategic Petroleum Reserve, which may have adverse effects on oil prices.
“A short-term catalyst for the next move may be the upcoming Energy Information Administration inventory report,” Leona Liu, a market analyst at DailyFX said, referring to the agency that will release its weekly report this evening.
SPR oil offers only temporary relief, and an increased supply from the Organization of Petroleum Exporting Countries or from U.S. shale producers is needed.
Whether or not the U.S. releases stocks from emergency reserves may temporarily weigh on prices. The effect will also be affected by the quantity of stock released and whether it will be done once or multiple times
According to market sources, gasoline stocks decreased by 2.8 million barrels over the week ended November 12, as reported by the American Petroleum Institute industry group.
