U.S. West Texas Intermediate (WTI) crude CLc1 futures fell US$1.34, or 1,2%, to $108.18 a barrel at 0031 GMT, while Brent crude LCOc1 futures dropped $1.33, or 1.2%, to $113.32 a barrel.
MELBOURNE: Oil prices skidded in early trade on Wednesday amid a push by U.S. President Joe Biden to bring down soaring fuel costs, including pressure on major U.S. firms to help ease the pain for drivers during the country's peak summer demand.
U.S. West Texas Intermediate (WTI) crude CLc1 futures fell US$1.34, or 1,2%, to $108.18 a barrel at 0031 GMT, while Brent crude LCOc1 futures dropped $1.33, or 1.2%, to $113.32 a barrel.
As the United States struggles to tackle soaring gasoline prices and inflation, U.S. President Joe Biden is expected on Wednesday to call for temporarily suspending the 18.4-cents a gallon federal tax on gasoline, a source briefed on the plan told Reuters. Biden had disclosed on Monday he was considering whether to call for a pause in the tax.
"Even oil traders acknowledged that higher oil prices hence higher gasoline prices would lead to a more aggressive tag team onslaught from the (U.S.) Fed pushing rates higher and the Biden administration getting increasingly more creative on the political and fiscal front to tame the energy inflation beast," said Stephen Innes, managing partner at SPI Asset Management.
Seven oil companies are set to meet Biden on Thursday, under pressure from the White House to drive down fuel prices as they make record profits.
Chevron Chief Executive Michael Wirth, however, on Tuesday, said criticising the oil industry was not the way to bring down fuel prices
"These actions are not beneficial to meeting the challenges we face," Wirth said in a letter addressed to Biden, which sparked a response from Biden saying the industry was being too sensitive.
Despite worries about inflation, demand is still on the road to recovery to pre-COVID levels and supply is expected to lag demand growth, keeping the market tight, as flagged by trading giant Vitol and Exxon Mobil Corp this week.
European oil sanctions on Russia for its invasion of Ukraine - which Moscow calls a "special operation" - have yet to take effect, meaning supply will only get tighter.
"The market is still coming to terms with the increasing disruption to Russian oil. European sanctions have yet to kick in," ANZ Research analysts said in a note, pointing to data showing that so far there has only been a relatively limited drop in Russian fuel supply to Europe since the conflict began.- Reuters
Earlier Report:
Oil price ticks higher on strong demand, tight supply
HOUSTON: Oil prices edged up on Tuesday on high summer fuel demand while supplies remained tight because of sanctions on Russian oil after its invasion of Ukraine.
Brent crude futures LCOc1 settled 52 cents, or 0.5%, higher at $114.65 a barrel. The U.S. West Texas Intermediate (WTI) crude CLc1 contract for July expired on Tuesday, closing at $110.65, with a gain of $1.09, or 1%. The more active August contract CLc2 was up $1.53 at $109.52.
Both benchmarks posted a weekly loss last week. For WTI it was the first weekly loss in eight weeks, for Brent the first in five.
"You have some people jumping in here to buy the bottom or what they hope is the bottom of the market," said Robert Yawger, director of energy futures at Mizuho in New York.
The 50-day simple moving average of U.S. front month futures CLc1 touched its highest since 2008, and Brent's touched its highest since 2013.
Prices drew support when Exxon Mobil Corp XOM.N Chief Executive Darren Woods predicted three to five years of fairly tight oil markets.
Vitol's head Russell Hardy flagged under-investment and a decline in production capacity for crude oil and a tight refining situation.
U.S. crude and gasoline inventories likely fell last week, while distillate stockpiles were seen up, a preliminary Reuters poll showed. Weekly inventory data is delayed by Monday's public holiday, with industry data due on Wednesday at 4:30 p.m. and government data scheduled for Thursday at 11 a.m. EIA/S
On the demand side, UBS analyst Giovanni Staunovo said that despite concerns over economic growth, data continues to show solid oil demand.
"We expect oil demand to improve further, benefiting from the reopening of China, summer travel in the northern hemisphere and the weather getting warmer in the Middle East. With supply growth lagging demand growth over the coming months, we continue to expect higher oil prices," he said.
The White House has asked the chief executives of six oil companies to a meeting on Thursday to discuss ways to reduce high energy prices.
On Monday, U.S. President Joe Biden said a decision on whether to pause a federal gasoline tax could come this week. The United States is also in talks with Canada and other allies to further restrict Moscow's energy revenue by imposing a price cap on Russian oil, Treasury Secretary Janet Yellen said on Monday.
The market has been supported by supply anxiety after sanctions on oil shipments from Russia, the world's second-largest oil exporter, and worries Russian output could fall due to sanctions on equipment needed for production.
European Union leaders aim to maintain pressure on Russia at their summit this week by committing to further work on sanctions, a draft document showed.
"Supply concerns are unlikely to subside unless there is a resolution to the Russia-Ukraine war, or unless we see a sharp rise in supply from either the U.S. or OPEC," said Madhavi Mehta, commodity research analyst at Kotak Securities.- Reuters
