Oil prices are down 5%, and Brent crude is below $110

Oil prices are down 5%, and Brent crude is below $110

Oil prices fell, about 5%, during trading today, Wednesday, June 22, 2022, amid US President Joe Biden’s effort to reduce high fuel costs.

The White House is putting pressure on America’s major energy companies; To help alleviate the suffering of drivers during peak summer consumption.

Oil Prices Today

The price of futures contracts for the benchmark Brent crude – for delivery next August – decreased by 4.31%, to reach $109.71 a barrel.

The price of West Texas Intermediate crude futures – for delivery next August – also fell by 4.78%, recording $104.29 a barrel, according to data seen by the specialized energy platform.

Oil prices ended their trading yesterday, Tuesday, with a rise of about 1%, in an attempt to compensate for the losses last week.

Gasoline Prices In America

As the United States, the world’s largest oil consumer, grapples with rising gasoline prices and inflation, President Joe Biden is expected on Wednesday to call for a temporary suspension of the 18.4-cents-a-gallon federal tax on gasoline, Reuters reported.

“I think the incessant Biden headlines, with the administration apparently in an inflation panic, played a role in the recent sale,” said Stephen Innes, managing partner at SBI Asset Management.

“Investors hate any uncertainty, even if it is irrational, in the context of known supply concerns,” he added.

Biden Pressure

Seven oil companies are set to meet with Biden on Thursday, under pressure from the White House to cut fuel prices, while posting record profits.

But Chevron CEO Michael Wirth said on Tuesday that criticizing the oil industry is not the way to lower fuel prices.

“These actions are not helpful in addressing the challenges we face,” Wirth added in a letter to Biden.

Oil Demand

Despite concerns about inflation, demand is still on track to recover to pre-corona levels, and supply is expected to slow in demand growth, keeping the market tight, trading giant Vitol and ExxonMobil note.

“The most likely outcome is an expansion of Brent’s premium to WTI,” said Jeffrey Haley, an analyst at energy consultancy Oanda.

“Brent crude is the benchmark internationally and in the real world, supplies remain tight,” he added, Reuters reported.

Refining Capacity

The latest government data showed, on Tuesday, that US oil refining capacity declined in 2021 for the second year in a row, as factories continued to be closed and reduced their ability to produce gasoline and diesel.

Official data showed a decrease in production capacity by 125,790 barrels per day last year, in addition to 800,000 barrels per day in 2020.