Oil Declines as Biden Faces Mounting Calls for an SPR Release

Source: By Sharon Cho and Alex Longley, Bloomberg • Posted: Monday, November 15, 2021

Oil fell as U.S. President Joe Biden faced more calls to tap the Strategic Petroleum Reserve to tackle surging gasoline prices.

West Texas Intermediate sank 1% Monday, while Brent also fell. Senate Majority Leader Charles Schumer, a fellow Democrat, urged Biden at the weekend to release oil from the nation’s emergency reserves, saying consumers needed immediate relief at the gas pump. Energy Secretary Jennifer Granholm told CNN that the President is evaluating the tools he has available, including a release from the Strategic Petroleum Reserve.

Surging crude prices are stoking a rally in U.S. gasoline

As the U.S. mulls a crude-supply release, Saudi Arabia and the United Arab Emirates signaled that OPEC+ will continue to be cautious in its plans to raise output. The group has been adding 400,000 barrels a day of production each month on paper, although its members have failed to pump that much in practice so far.

The Organization of Petroleum Exporting Countries and its allies are particularly wary about the stability of demand in the coming months. Already in Europe, a handful of smaller consuming nations have reimposed restrictions as a result of Covid-19 cases. President Biden will also meet virtually with China’s President Xi, the world’s largest oil importer, later on Monday.

“Possible U.S. SPR crude releases are blamed for the weakness,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “But rising Covid-19 infections, as well as China weakness, is probably the more likely reason.”

  • WTI fell 1.1% to $79.86 a barrel at 8:20 a.m. in New York.
  • Brent was 1.2% lower at $81.22

The challenge from inflation, especially gasoline, is a mounting political problem for Biden. The president’s approval rating sank to a new low, according to a Washington Post-ABC News poll. About half of Americans overall, as well as independents, blame him for accelerating inflation, it showed.

All the while, Italy’s Eni SpA said oil may hit $100 a barrel due to a lack of investment from energy companies.

“Maybe it can reach that,” Chief Executive Officer Claudio Descalzi told Bloomberg Television. “But not for a long time.”

Related coverage:
  • Any release of oil from the U.S. strategic petroleum reserves wouldn’t dampen the market or change things fundamentally in terms of prices, Vitol CEO Russell Hardy said at the Adipec conference.
  • China’s processing volume rose after as the government urged action to address an energy crunch, with refiners ramping up.
  • The highest fuel prices in India’s history are spurring efforts to shift the nation’s ubiquitous motor scooters to electric models.

— With assistance by Dan Murtaugh