Oil prices steady after U.S. call for more oil raises supply concerns
Oil prices slipped on Thursday following two days of gains after a call from the United States, the world’s top oil consumer, for major producers to boost output reinforced supply concerns as economies ease their coronavirus restrictions.
Brent crude futures slipped by 17 cents, or 0.2%, to $71.27 a barrel by 0650 GMT, after earlier rising to a session-high of $71.69.
U.S. West Texas Intermediate (WTI) crude futures fell by 23 cents, or 0.3%, to $69.02 after rising to $69.51 earlier.
“Crude prices are paring earlier gains that stemmed from President Biden’s plea to OPEC for more crude,” said Edward Moya, senior analyst at OANDA.
“The rally in oil prices is hitting a major roadblock in Asia as concerns grow China’s outlook is looking worse this month and that can’t be good for the demand outlook.”
Biden’s administration on Wednesday urged the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to boost oil output to tackle rising gasoline prices that they see as a threat to the global economic recovery.
OPEC agreed in July to boost output each month by 400,000 bpd over the previous month, starting in August, until the rest of their record cuts of 10 million bpd, about 10% of world demand, made in 2020 are phased out.
However, there are still concerns that the increase will not be enough to meet demand as the U.S. and Europe ease their coronavirus-induced movement restrictions.
“The Biden Administration said that the recently agreed production increases will not fully offset previous production cuts imposed during the pandemic,” said ANZ in a note.
Later, the White House said its outreach to OPEC+ is ongoing and aimed at long-term engagement, not necessarily an immediate response.
The administration added it had not called upon U.S. producers to ramp up production, which led the market to turn higher on Wednesday, said Phil Flynn, a senior analyst at Price Futures Group in Chicago.
Other data from the EIA report weighed on prices. U.S. crude oil stockpiles fell modestly last week, out of step with forecasts, while gasoline inventories dipped to their lowest level since November. More volatile weekly demand numbers also declined. [EIA/S]
Oil prices were earlier boosted by a pullback in U.S. dollar, which can send speculative investors into greenback-denominated assets like commodities, and also after the U.S. Senate late on Tuesday passed a $1 trillion infrastructure bill. [USD/]
