Oil prices were steady on Thursday after falling in the previous session on concerns rising inflation in the United States, spurred by climbing energy costs, may prompt the government to release more strategic crude stockpiles to drive down prices.
On Wednesday, Brent crude futures fell by 2.5% and West Texas Intermediate (WTI) futures dropped by 3.3% after reports that U.S. inflation increased at the fastest rate in 30 years pushed the dollar higher and crude inventories in the U.S., the world’s biggest oil consumer, rose after the government released some strategic reserves.
Brent crude futures gained 31 cents, or 0.4%, to $82.95 a barrel at 0515 GMT, while WTI futures rose 29 cents, or 0.4%, to $81.63.
“Crude prices are trying to find their footing after yesterday’s slide as runaway inflation in America is adding pressure on the Biden administration to tap the Strategic Petroleum Reserve,” said Edward Moya, senior analyst at OANDA.
“Energy traders know that an SPR release will only deliver a very short-term drop in prices that won’t provide much relief for the American consumer.”
Consumer inflation data on Wednesday showed U.S. prices were rising at a 6.2% year-over-year rate. The dollar gained on expectations that actions by the White House and U.S. Federal Reserve to curb the rising prices may lead to higher interest rates and tighter monetary policy. Oil typically trades inversely to the dollar.
U.S. President Joe Biden said he asked the National Economic Council to work to reduce energy costs and the Federal Trade Commission to push back on market manipulation in the energy sector to reverse inflation.
Some of the efforts to cut energy costs might include releasing more crude from the U.S. Strategic Petroleum Reserve (SPR).
U.S. crude stocks rose last week on the SPR injection while inventories of gasoline and distillates like diesel declined further, the Energy Information Administration said on Wednesday.
Crude inventories rose by 1 million barrels in the week to Nov. 5, compared with analysts’ expectations for an increase of 2.1 million barrels.
The SPR release was 3.1 million barrels, the largest since July 2017.