Tuesday, June 28, 2022

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Oil price tumbles to $109 a barrel amid Biden’s push for petrol tax holiday

Oil prices fell amid a push by President Joe Biden to bring down soaring fuel costs in the United States.

On Wednesday, Brent crude futures dropped 4.51 percent to $109.98 a barrel at 09.00 GMT+1.

US West Texas Intermediate (WTI) crude futures also slid 5.46 percent, at $104.1 a barrel. Similarly, Brent crude futures dropped $5.67, or 4.51%, to $109.98 a barrel.

Biden is expected to suspend the 18.4 cents a gallon federal tax on gasoline, according to a report by Reuters.

“I think the non-stop Biden headlines, with the administration seemingly in inflation panic mode, have played a part in the latest sell-off as investors hate any uncertainty, even if irrational in the context of the known supply concerns,” Stephen Innes, managing partner at SPI Asset Management, said in a note.

On Thursday, seven oil companies would meet Biden under pressure from the White House to drive down fuel prices as they make record profits.

Demand is not back to pre-COVID levels and supply is expected to lag demand growth, keeping the market tight, trading giant Vitol had said.

“From here, a more likely outcome is a widening of the Brent premium over WTI,” Jeffrey Halley, an analyst at energy consultancy OANDA said.

“Brent is the internationally traded benchmark, and in the real world, supplies remain tight.”

For Nigeria, perennial challenges continue to dwindle the country’s oil production capacity, leading to petrol scarcity. 

On Monday, queues for petrol resurfaced in Lagos days after scarcity reared its head in Ibadan, Oyo state.

TheCable had reported that petrol scarcity would continue as available statistics showed the country is experiencing acutely low crude oil production. 

In May, Nigeria’s oil output dropped to 1.02 million barrels per day — the lowest figure in record time.

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