Crude Oil Edges Higher; Oil Majors to Meet With Biden Administration

By Peter Nurse — Oil prices stabilized Thursday, edging higher after the previous session’s weakness with traders focusing on a meeting of major U.S. oil refiners with the Biden administration to discuss methods to bring down fuel costs.

By 09:20 AM ET (1320 GMT), futures traded 0.4% higher at $106.58 a barrel, while the contract rose 0.6% to $112.36 a barrel. Both benchmarks plunged 3% on Wednesday and are near their lowest levels since mid-May.

U.S. were up 0.7% at $3.8626 a gallon.

The crude market weakened sharply on Wednesday following comments from U.S. Federal Reserve chief Jerome Powell that although the central bank was not trying to engineer a recession to stop , such a slowdown remained a possibility.

“A slowdown in global growth is a risk to oil demand, which could help ease some of the tightness in the market,” said analysts at ING, in a note. “Already, we have seen demand estimates revised lower over the course of the year. While this may help to ease some of the tightness in the short to medium term, it does little to solve the longer-term supply shortfalls.”

It’s this supply tightness that the U.S. oil refiners will likely discuss with U.S. Energy Secretary Jennifer Granholm in an emergency meeting later Thursday as record-high fuel prices threaten to become a live political issue ahead of the midterm elections.

Refiners cut capacity during the COVID-19 crisis shutdowns and have been slow to restart plants, something which has annoyed the White House with the oil majors reporting bumper profits as the prices have soared.

However, these refiners say investing in reopening plants carries significant financial risks, and they are wary of the Biden administration’s green agenda.

Meanwhile, Russia’s war in Ukraine, which has upended oil flows, approaches its fifth month. China and India may be taking advantage of discounted prices to buy more Russian oil than before most of the West banned Moscow’s crude, but this is only having a limited impact on global supply.

The weekly U.S. petroleum inventory data from the , released Wednesday, a day later than usual following Monday’s holiday, showed a surprise build of 5.6 million barrels last week.

Traders will have to wait for the official inventory data from the U.S. for confirmation, as this will be delayed due to technical problems, but a similar number would mean the largest crude build since early May. 

It’s not only the crude market where Russia’s invasion of Ukraine has disrupted the usual flow. A dozen European Union countries have now been affected by cuts to gas supply from Russia, EU climate policy chief Frans Timmermans said earlier Thursday.

This has resulted in Germany, the largest Eurozone economy, moving a step closer to rationing natural gas supply by activating the second stage of a three-part plan to ensure security of supplies.

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