Oil prices declined on Wednesday after U.S. gasoline stocks fell more than expected last week. The situation regarding gasoline stocks could heighten pressure on the Biden administration to release oil from emergency reserves to cap soaring gasoline prices.
U.S. West Texas Intermediate (WTI) crude futures dropped 0.9% to $80.00 a barrel, extending a 12 cent loss from Tuesday. On Wednesday, Brent crude futures fell 72 cents or 0.9% to $82.71, erasing a 38 cent gain from Tuesday.
President Joe Biden has been considering releasing oil from the Strategic Petroleum Reserve (SPR) to improve the situation. Energy Secretary Jennifer Granholm also made a comment regarding the SPR earlier this month. Granholm said Biden could act, but there was still no word on whether he would authorize a sale from the SPR.
Not everyone agrees with Joe Biden.
On Tuesday, U.S. House Majority Leader Steny Hoyer stated that he disagrees with Mike Schumer. Senate Majority Leader Mike Schumer wants to release oil from the SPR to lower gas prices. Hoyer thinks that the purpose of the SPR is not to regulate prices. It’s for a collapse in supply at times of emergency. Two days earlier, Mike Schumer stated that Biden’s administration should release oil from emergency petroleum reserves to lower rising gasoline prices as people go into the holiday season.
Oil prices and SPR
The government should find a more long-lasting solution, as SPR won’t solve the problem. It would only offer temporary relief. One option is to produce more oil in the U.S. Another option is to ask the Organization of the Petroleum Exporting Countries (OPEC) to increase production as soon as possible. But OPEC is not willing to change its plan.
The UAE’s energy minister defended OPEC and its allies. Suhail al-Mazrouei said he received calls from different countries’ ministers. All of them asked al-Mazrouei to take action. OPEC plans to “follow the facts,” according to Suhail al-Mazrouei. The country’s energy minister pointed to EIA predictions that suggest an oil surplus in the first quarter of 2022.
Gasoline stocks declined by 2.8 million barrels for the week that ended on November 12. Data provided by the American Petroleum Institute highlights the severity of the problem. Analysts expected gasoline stocks to decline by 600,000. Last week, crude inventories rose by 655,000 barrels.