Biden administration to sell gasoline reserves: oil falls

Biden administration to sell gasoline reserves: oil falls
Biden administration to sell gasoline reserves: oil falls

New York (awp/afp) – Oil prices fell on Tuesday as investors came to terms with geopolitical risk while the US administration took the lead in trying to lower gasoline prices ahead of the season summer travel by releasing a volume of gasoline reserves on the market.

The price of a barrel of Brent from the North Sea for delivery in July fell 0.99% to 82.88 dollars.

Its American equivalent, a barrel of West Texas Intermediate (WTI) for delivery in June, which is the last day of trading, lost 0.67% to $79.26.

The US Department of Energy announced it was putting up for sale one million barrels of gasoline from its conserved reserves in the Northeast, an initiative “strategically chosen to maximize the impact on lower prices in the time when Americans take the wheel,” a government statement said.

This approach comes just before the long Memorial Day weekend in the United States which marks the unofficial start of summer and car travel.

“With Memorial Day arriving and the start of the travel season, the Biden-Harris administration is taking the initiative to lower gasoline costs by selling a million barrels,” explained the House spokesperson. Blanche Karine Jean-Pierre.

For Patrick De Haan, analyst for GasBuddy, this availability on the market “should have a minor impact on pump prices nationally, but it may exert slight downward pressure in the Northeast”. The analyst recalled that one million barrels of gasoline corresponded to 2.7 hours of national gasoline consumption.

Phil Flynn of Price Futures Group noted the well-thought-out timing of the move, “just before the travel season and before an election”…

More generally, the economy in the United States, monetary policy and the state of demand remained at the center of brokers’ concerns while several officials from the Federal Reserve (Fed) reiterated that high interest rates should stay for now to curb inflation. “There is uncertainty” which is dampening investor momentum.

The market shrugged off new Ukrainian drone attacks on Russian refineries and another Houthi attack on an oil tanker in the Red Sea over the weekend.

Furthermore, the death of Iranian President Ebrahim Raïssi in a helicopter crash and concerns about the state of health of Saudi King Salman, who postponed his official visit planned for this week to Japan, “pose a risk of succession in the Middle East”, noted DNB analysts.

However, “the oil market is well accustomed to geopolitical risk,” they noted.

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