Oil prices notched the longest stretch of weekly losses since March with US President Joe Biden keeping investors guessing about whether he will act to tame higher energy prices that are driving a surge in inflation.
Futures in New York fell 1 percent on Friday, yet pared some losses near the end of the session after White House press secretary Jen Psaki declined to say whether Biden plans to release oil from the Strategic Petroleum Reserve (SPR).
She said the administration has been pushing oil-producing countries to pump more crude and seeking to ensure there is not price gouging at the pump.
West Texas Intermediate crude oil for December delivery fell US$0.80 to US$80.79 a barrel on Friday, down 0.6 percent for the week.
Brent crude for January delivery fell US$0.70 to US$82.17 per barrel, losing 0.7 percent weekly.
Biden has been weighing moves that include a SPR release to try to bring down the cost of gasoline at the pump, which has hit a seven-year high.
For several weeks, a small group of his top aides have discussed possible moves, people familiar with the matter have said.
Consensus has been elusive, with some US Department of Energy officials pushing back against tapping the SPR, while White House aides lobby for a release — or even halting US crude exports.
“Oil is in correction mode and the first key support is the psychologically important US$80 per barrel area,” Price Futures Group Inc senior market analyst Phil Flynn said. “The fear is greater than the reality of what the Biden administration can do to bring down oil and gas prices.”
Oil has marched higher this year as consumption rebounds from the impact of the COVID-19 pandemic, helping to stoke the fastest US consumer price inflation in three decades.
Soaring fuel bills and energy costs are also adding to inflationary pressures globally. The price increases are not seen as slowing down either. Societe Generale SA boosted its crude price forecasts for next year by US$10 a barrel.
The challenge facing Biden over gasoline costs is particularly apparent in California, the state where drivers typically pay more for the fuel than anywhere else in the US. Retail prices average US$4.65 a gallon (3.78 liters), just US$0.02 shy of the record set in 2012, according to AAA data.
Meanwhile, in signs of weakness in the broader energy market, the Nymex 3-2-1 crack spread, a rough gauge of refining margins for processing crude into fuel, on Friday dropped to the lowest since late September.
Oil’s drop has come as the US dollar index posted the biggest weekly gain since August on concern that rising US inflation would warrant earlier interest rate hikes from the US Federal Reserve.
A stronger US dollar makes raw materials priced in the currency less attractive for overseas buyers.
Additional reporting by AP
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