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Oil Swings as Biden Faces Mounting Pressure to Rein In Prices

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These translations are done via Google Translate
Oil fluctuated as investors weighed the odds that the White House will intervene to cool prices, with President Joe Biden saying that reversing inflation is now his top priority, particularly in energy.West Texas Intermediate bounced between gains and losses, but was still down about $4 from its high for the week. The president is facing growing pressure to address rising prices as gains in consumer costs hit the fastest pace in decades. His options include tapping the Strategic Petroleum Reserve or even banning oil exports. Eleven Democratic senators urged Biden to act on the issue in a letter this week.

WTI has surged this year, boosting inflationary pressures

As much as 60 million barrels could be released from the SPR, in part by bringing forward mandated sales from 2022, according to Citigroup Inc. That would be enough to wipe out the supply deficit that the Energy Information Administration has forecast for the rest of this year.

With the economic recovery from the pandemic boosting demand, draining stockpiles and fanning inflation, crude prices have been on the rise for much of 2021. Despite the upswing, the Organization of Petroleum Exporting Countries and its allies have been returning supplies only gradually, arguing that prudence is still merited as risks to global consumption remain.

“The market is in wait-and-see mode,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “Everyone is waiting for the next move of the U.S. administration.”

  • WTI for December delivery traded down 0.7% at $80.77 as of 11:13 a.m. London time
    • The contract dropped 3.3% on Wednesday
  • Brent for January settlement eased 0.6% to $82.17 a barrel

The slump in U.S. benchmark prices on Wednesday came as data showed an increase in nationwide crude stockpiles, although inventories at the key storage hub in Cushing, Oklahoma, declined. Separately, data showed U.S. consumer prices rising at the fastest annual pace since 1990 last month.

With the market keenly watching for potential U.S. steps, trading has been highly volatile. One closely monitored market gauge — the spread between the nearest two December contracts — has swung by more than a dollar in four of the last six trading sessions, when it would generally move a few cents.

Related coverage:
  • China issued only a paltry amount of fuel-export quotas as it sought to alleviate energy shortages by prioritizing the domestic market.
  • Total U.S. crude and product exports jumped to the highest since July, largely because of a boost in distillate outflows.
  • Russia’s Deputy Energy Minister Pavel Sorokin met with U.S. Deputy Energy Secretary David Turk and discussed oil-market stabilization.

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