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Market Shrugs Off Biden's Readiness To Tackle Oil Price Rally

Crude oil prices dipped this week after the White House said there were still tools on the table to address the rising prices of the commodity but quickly regained ground in the latest sign that there are a lot more powerful factors at play when it comes to oil prices.

"We continue to work with producer and consumer countries and these steps have had real effects on prices and ultimately tools continue to remain on the table for us to address prices," Emily Horne said earlier this week, adding "We will continue to monitor prices in the context of global economic growth and engage our OPEC+ partners, as appropriate." 

This caused a dip in prices, per Bloomberg, after West Texas Intermediate closed at the highest in seven years on Tuesday. Yet the White House statement was not the only reason for the dip. It came on the day that the American Petroleum Institute reported yet another weekly build in gasoline stocks.

The Energy Information Administration is reporting its own inventory estimates in oil and fuels today. For the previous two weeks, the administration estimated hefty gasoline builds as well, totaling over 18 million barrels.

Stronger than expected demand for oil has pushed prices some 30 percent higher over the last couple of months, and there is further to go, according to analysts who are emphasizing OPEC's dwindling spare production capacity and Russia's apparent struggle to boost crude production in line with its OPEC+ quota.

On the bearish side, the EIA reported earlier this week that crude oil production in the Permian had hit a record in December and would continue to grow this month and next, reaching 5.076 million bpd in February. Total shale oil output was seen rising to 8.54 million barrels daily in February.

This, however, may not be enough to quench supply concerns that are fueling the bullish sentiment. At the time of writing, Brent crude was trading over $88 per barrel, and WTI was changing hands at over $87 a barrel.

By Irina Slav for Oilprice.com

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