Oil slumps by more than $5 as Biden expected to cut US fuel cost

Oil prices fell more than $6 a barrel on Wednesday amid a push by US President Joe Biden to cut fuel costs for drivers in the latest episode to sour White House-industry relations American oil.

Brent crude futures were down $5.10, or 4.5%, at $109.55 a barrel, while US West Texas Intermediate (WTI) futures fell $5.37 , or 5.9%, to $104.15 as of 0800 GMT.

Contracts hit their lowest levels since May 19 and May 12, respectively.

Biden is expected to seek the temporary suspension of the 18.4-cent-per-gallon federal gasoline tax on Wednesday, a source said, as the United States, the world’s largest oil consumer, struggles to cope with rising gasoline prices and inflation.

“The latest in a long line of attempts to temper soaring prices at the pumps is having the desired effect. Yet there is no guarantee that this knee-jerk reaction will stand the test of time,” he said. said Stephen Brennock of PVM, pointing to an expected increase in summer demand.

Biden is expected to make the announcement at 6:00 p.m. GMT. On Thursday, seven oil companies are due to meet the president under pressure from the White House to lower fuel prices as they make record profits.

Chevron CEO Michael Wirth said criticizing the oil industry was not the way to lower fuel prices and the government needed to change its approach. Biden responded by commenting on the industry’s easily hurt feelings.

Global supply is still expected to lag demand growth, as trading giant Vitol and Exxon Mobil Corp reported this week.

The $2.4 trillion expected to be invested in energy this year includes record spending on renewables but is not enough to close a supply gap and tackle climate change, the government said on Wednesday. International Energy Agency.

Meanwhile, U.S. oil refining capacity slumped in 2021 for the second straight year, government data showed on Tuesday, as plant shutdowns reduced capacity to produce gasoline and diesel. diesel.

(Additional reporting by Sonali Paul and Mohi Natayan)

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