Are the Oil Prices Falling to the Original Level?
Wednesday saw a more than $4 drop in oil prices as U.S. President Joe Biden pushed for lower gasoline prices, putting pressure on the nation’s main energy companies to lessen the burden on motorists during the high summer travel season.
U.S. West Texas Intermediate (WTI) oil futures were at $105.48 a barrel by 04:25 GMT, off their lows but still down $4.04, or 3.7 percent. In a similar vein, the price of Brent oil futures fell $3.87, or 3.4 percent, to $110.78 a barrel. President Joe Biden is anticipated to call for suspending the federal tax on gasoline, which is 18.4 cents per gallon, on Wednesday as the US battles rising gas costs and inflation, a source familiar with the proposal told Reuters.
Will Oil Prices Soon See a Decline?
On Thursday, Biden will meet with seven oil corporations under pressure from the White House to lower fuel costs as they post record profits.
But on Tuesday, Michael Wirth, the chief executive of Chevron (NYSE: CVX), argued that criticizing the oil business was not the best method to lower gasoline costs. In a letter to Biden, Wirth stated, “These measures are not conducive to tackling the difficulties we confront,” prompting Biden to respond that the sector was being too sensitive. Despite inflation concerns, demand is still recovering to pre-COVID levels, and supply growth is anticipated to trail demand, keeping the market tight, as noted this week by trading titan Vitol and Exxon Mobil Corp (NYSE: XOM).
The market is still adjusting to the growing interruption to the Russian oil supply. European sanctions have not yet taken effect. According to statistics, there has only been a very small decrease in Russian fuel supplies to Europe since the crisis started.
The newest government statistics revealed on Tuesday that U.S. oil refining capacity decreased in 2021 for the second year in a row as facility closures continued to reduce their capacity to manufacture gasoline and diesel. According to the official figures, capacity decreased by 125,790 barrels per day (BPD) in 2017 in addition to an 800,000 BPD decrease in 2020.
