Oil prices dropped on Wednesday after U.S. gasoline stocks fell more than expected last week, which could heighten pressure on the Biden administration to release oil from emergency reserves to cap soaring gasoline prices.
U.S. President Joe Biden has been considering releasing oil from the Strategic Petroleum Reserve (SPR) to cool gasoline prices, which hit a record high at California pumps this week. Lawmakers, however, have mixed views on whether it is needed.
U.S. House Majority Leader Steny Hoyer said late on Tuesday he did not agree with Senate Majority Leader Chuck Schumer’s call on Sunday for tapping the SPR to lower gas prices, saying the reserve was there to fill a crude oil supply gap in times of emergency.
Analysts say SPR oil would only offer temporary relief and what is needed is increased supply from U.S. shale producers or the Organization of the Petroleum Exporting Countries (OPEC).
“It seems the energy market is convinced that even if the U.S. resorts to tapping the Strategic Petroleum Reserve, the benefits would be minimal … to the U.S. consumer,” OANDA analyst Edward Moya said in a note.
Data from the American Petroleum Institute industry group showed gasoline stocks fell by 2.8 million barrels for the week ended Nov. 12, according to market sources.
The drawdown was much bigger than the 600,000 barrel decrease that 10 analysts polled by Reuters had expected. Crude inventories rose by 655,000 barrels, the market sources said. That was less than analysts’ expectations for a build of 1.4 million barrels.