© Reuters.
By Barani Krishnan
Investment.com – The crude oil market fell as much as $8 per barrel between Wednesday’s highs and lows, the second time in five trading sessions that it fell sharply, as President Joe Biden’s gasoline tax cuts and Other measures to contain fuel prices ran away catching up with the bulls’ attempt to keep oil prices north of $120.
Trading in New York, the benchmark for US crude, fell $3.10, or 3.1%, to $106.12 a barrel by 1:43 PM ET (17:43 GMT).
London-traded crude, the global benchmark for oil, fell $3.15, or 2.8%, to $111.50.
At the session low, WTI was at $101.58 from its high of $109.58. Brent is at $107.06 from an intraday high of $116.25.
Wednesday’s volatility was fueled by uncertainty about government actions, including regulations, that could target refineries and oil producers with fuel prices fluctuating just below record high of 5 USD/gallon.
Oil bulls are trying to brush off the worst sell-off in two months that sent WTI down 9% last week and Brent down 8% amid concerns that a US recession could dent demand oil demand.
“Oil volatility will remain elevated as opposing opinions are emerging about where prices will end up for the year,” said Ed Moya, analyst at online exchange OANDA. “Oil prices are under pressure as fears of a global economic slowdown boost demand for crude. Inflation and growth concerns are not going to improve anytime soon, and that has turned all short-term drivers negative for the crude oil demand outlook.”
Moya noted that Citigroup’s head of commodity forecasting, Ed Morse, raised $80 in oil in the fourth quarter even as Goldman Sachs’ Jeff Currie stuck with his prediction of a so-called super pie. car in the price of crude oil.
Biden is expected to ask the US Congress to consider suspending the federal tax of 18.4 cents/gallon for three months on gasoline and call on states to suspend their fuel taxes, an administration official said. high said.
While falling pump prices could indeed boost fuel demand and support crude prices, PVM analyst Stephen Brennock said in comments reported by Reuters that traders are concerned that the administration Additional measures can be taken to cool down high energy prices.
That could include closing a loophole, known as Footnote 563 under the Commodity Futures Trading Commission’s trading guidelines, or CFTC, that has been flagged for the Biden administration, an investigative report by TYT Network said last week.
Footnote 563 essentially allows Wall Street’s biggest financial firms to overwhelm healthy price setting with large volumes of commodity-based swaps – essentially betting on commodity prices chemical.
Market participants are also keeping an eye on weekly US oil inventory data, due after market settlement from API or the American Petroleum Institute.
The API will release around 4:30 p.m. ET (20:30 GMT) a snapshot of the closing balances for U.S. crude oil, gasoline, and distillates for the week ending June 17. This number serves as a precursor to official inventory data on the same due date. from the US Energy Information Administration on Thursday.
For last week, analysts tracked by Investor.com expect the EIA to report a decline of 569,000 barrels, compared with an increase of 1.96 million barrels reported for the week to June 10.
On the front, consensus is down 452,000 barrels from a drop of 710,000 barrels in the previous week.
With, the expectation is an increase of 328,000 barrels from last week’s gain of 725,000.
