Oil prices dip after report that Biden plans to tap petroleum reserve

Reports that President Biden plans to take advantage of Strategic Oil Reserve of the country for the third time in six months in a move to curb rising U.S. fuel costs, it has pushed oil prices down nearly $ 5 a barrel in overnight trading.

Mr Biden is preparing to order the release of up to 1 million barrels of oil, according to two people familiar with the decision. An announcement is expected as early as Thursday, when the White House says the president will comment on his administration’s plans to combat rising gas prices. The two men spoke on condition of anonymity to advance the decision.

U.S. oil was trading at $ 101.65 a barrel on Thursday, while the world benchmark was $ 107.39 a barrel, according to Bloomberg. That’s more than about $ 60 a year ago.

The average price of gas in the U.S. is now $ 4.23 per gallon, below the all-time high of $ 4.33 on March 11, but still rising sharply from $ 2.87 a year ago, according to AAA.

The price of crude oil has been rising steadily since the beginning of last year. It reached $ 100 a barrel in March later Russia invaded Ukraine – The first time in 12 years he broke three digits. Pump prices have risen steadily, exceeding $ 4 per gallon on average in most US states

However, rising prices have not stimulated US suppliers to produce more oil. Many oil and gas executives say they are reluctant to increase production even at current high prices, according to a recent survey by the Federal Reserve Bank of Dallas.

He was asked what level the price of West Texas Intermediate oil should reach to get the oil and gas companies listed on the stock exchange. return to growth mode, 29% of executives said their expansion plans did not depend on price. Another 9% called a price above $ 120 a barrel.

Biden has seen its popularity plummet as inflation peaked at 40 in February and the cost of oil and gas rose after Russia invaded Ukraine.

“Fuel prices are of great importance to the Biden administration and the Democrats in Congress ahead of the November election,” Height Securities analyst Benjamin Salisbury said in a report. “Consumers / voters are disproportionately sensitive to fuel prices, but there are few tools for policymakers to cut prices significantly in the short term. A six-month statement would be extended to the November election.”

The price of crude oil is the most important factor affecting gas prices. A $ 10 change in the price of a barrel of oil raises the price of a gallon of gas by 25 cents, the Federal Reserve Bank of St. Louis has estimated. Louis.

The Strategic Oil Reserve is a collection of 60 underground salt caverns along the coasts of Louisiana and Texas, where millions of gallons of crude oil are stored in barrels. Known as the world’s largest emergency crude oil supply, the federally owned facility is managed by the U.S. Department of Energy. The President of the United States may decide to take advantage of the reservation, but only under a set a list of parameters.

The Biden administration announced in November the release of 50 million barrels of the strategic reserve in coordination with other countries. And after the war between Russia and Ukraine began, the United States and 30 other countries agreed on one additional release of 60 million reserve barrels, with half of the total coming from the US

The Associated Press contributed to this report.