West Texas Intermediate climbed 0.6%, after earlier adding as much as 1.2%. Prices have rebounded this year as the global economic recovery bolsters demand, and with gasoline now hitting a record in California, President Joe Biden is under pressure to tap the country’s Strategic Petroleum Reserve.
Calls increased for a response from the U.S. after the OPEC+ group of producers refused to step up the pace of output hikes, citing a continuing need for caution. Yet some consuming nations have questioned whether a co-ordinated sale of strategic reserves by major oil users would help. And the International Energy Agency said Tuesday that market tightness is in fact starting to ease.
“There is a good chance that in coming months the market will be left to its own devices,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. “Louder calls on releasing SPR or pushing OPEC+ to increase supply will remain on the level of rhetoric.”
Since hitting a seven-year high above $85 last month, oil has drifted lower amid uncertainty over U.S. policy and concern a resurgence in the pandemic may crimp demand. The Organization of Petroleum Exporting Countries and its allies are restoring supplies halted last year, but only gradually.
Meanwhile Jeremy Weir, executive chairman and chief executive officer of Trafigura Group, added his name to a roster of industry heavyweights predicting further price gains. Crude above $100 a barrel is possible given the “very tight oil market,” he said during the FT Commodities Asia Summit.
In a sign of strength in the physical market, the spot differential for Russian ESPO crude to be shipped in January rose by 50 cents a barrel over last month, according to traders who asked not to be identified. Earlier this week, ONGC Videsh Ltd. also sold Sokol at the highest since January 2020.