by Sonali Paul
MELBOURNE (Reuters) – Oil prices rose in early trade on Wednesday to ease rising fuel costs, including pressure on major US firms to help ease the pain of drivers during the country’s peak heat demand by US President Joe Biden. Prices declined.
US West Texas Intermediate (WTI) crude futures fell $1.34, or 1.2%, to $108.18 a barrel by 0031 GMT, while Brent crude futures fell $1.33, or 1.2%, to $113.32 a barrel.
As the United States struggles to deal with rising gasoline prices and inflation, US President Joe Biden is expected to call on Wednesday to temporarily suspend the 18.4-cent-gallon federal tax on gasoline, the plan. But a source with information told Reuters. Biden revealed on Monday that he is considering whether to call for a tax pause.
“Even oil traders acknowledged that higher oil prices therefore higher gasoline prices would lead to a more aggressive tag team attack from the (U.S.) Fed and the Biden administration’s political and financial efforts to reduce energy inflation.” Getting more creative on the front is the Beast,” said Stephen Innes, managing partner at SPI Asset Management.
Under pressure from the White House, seven oil companies are set to meet with Biden on Thursday as they post record profits.
However, Chevron chief executive Michael Wirth said on Tuesday that criticizing the oil industry is not the way to reduce fuel prices.
“These actions are not beneficial to address the challenges we face,” Wirth said in a letter addressed to Biden, which prompted a response from Biden that the industry was too sensitive.
Despite concerns about inflation, demand is still on a recovery track to pre-COVID levels and supply demand is expected to rise, keeping the market tight, as trading giants Vitol and Exxon reported this week. Flagged by Mobil Corp.
The European oil embargo on Russia for its invasion of Ukraine – which Moscow calls a “special operation” – has yet to take effect, meaning supplies will only harden.
“The market is still coming to terms with the growing disruption in Russian oil. European sanctions have not yet been implemented,” analysts at ANZ Research said in a note. Fuel supplies to Europe since the start of the conflict.
(Reporting by Sonali Paul; Editing by Kenneth Maxwell)