SINGAPORE: Oil prices were flat Thursday after falling in the previous session amid fears of rising inflation in the United States, spurred by rising energy costs, could prompt the government to release more strategic crude stocks to lower prices.
On Wednesday, Brent crude futures fell 2.5% and West Texas Intermediate (WTI) futures fell 3.3% after reports that U.S. inflation rose at the lowest rate. fastest in 30 years pushed the dollar higher and inventories of crude in the United States, the world’s largest oil consumer, rose after the government released strategic reserves.
Brent crude futures were up 31 cents, or 0.4%, to $ 82.95 a barrel at 5:15 GMT, while WTI futures were up 29 cents, or 0.4%, to $ 81.63.
“Crude prices are trying to find their balance after yesterday’s drop as soaring inflation in America puts additional pressure on the Biden administration to draw on the strategic oil reserve,” said Edward Moya , Senior Analyst at OANDA.
“Energy traders know that an SPR version will only bring prices down in the very short term which will not provide much relief to the American consumer.”
Consumer inflation data on Wednesday showed US prices were rising at a rate of 6.2% year-on-year. The dollar gained on expectations that actions by the White House and the US Federal Reserve to curb price increases could lead to higher interest rates and tighter monetary policy. Oil is generally traded inversely to the dollar.
US President Joe Biden said he asked the National Economic Council to work to cut 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 reduce energy costs could include releasing more crude from the United States Strategic Petroleum Reserve (SPR).
Inventories of US crude rose last week thanks to the injection of SPR while inventories of gasoline and distillates such as diesel fell further, the Energy Information Administration said on Wednesday.
Crude inventories rose 1 million barrels in the week to November 5, compared to analysts’ expectations for an increase of 2.1 million barrels.
SPR’s release was 3.1 million barrels, the largest since July 2017.