Oil Rebounds After U.S. Calls for Higher Output and Inventory Drop

Oil prices closed higher on Wednesday, rebounding from early losses that followed news about pressuring OPEC to raise production and the release of the weekly inventory data in the United States.

The U.S. is asking the Organization of the Petroleum Exporting Countries (OPEC) to increase production, claiming that the global economic recovery requires higher output levels, especially amid an increase in fuel prices.

“I want to make sure that nothing stands in the way of oil-price declines leading to lower prices for consumers,” said U.S. President Joe Biden.

“Recently we’ve seen the price that oil companies pay for a barrel of oil begin to fall, but the cost of gasoline at the pump for more American people hasn’t fallen.”

“That’s not what you’d expect in a competitive market. I want to make sure that nothing stands in the way of oil-price declines leading to lower prices for consumers.”

Earlier today, data by the U.S. Energy Information Administration (EIA) showed that crude inventories declined by 400,000 barrels last week, with gasoline inventories falling by 1.4 million barrels and distillate stockpiles increasing by 1.8 million barrels.

Brent crude futures for October delivery gained 81 cents, or 1.15%, to close at $71.44 per barrel.

Meanwhile, the West Texas Intermediate (WTI) crude futures for September delivery closed higher by 96 cents, or 1.41%, at $69.25 per barrel.

Both the U.S. and global benchmark crudes settled at their highest level since August 3, after rising for two consecutive sessions.

In the U.S., the Biden administration is responding to the higher gasoline prices with the White House planning to pressure the OPEC+ alliance to increase production and directing the Federal Trade Commission (FTC) to investigate illegal practices that might be leading to the surge in fuel prices that reached their highest average since October 2014 last month.

According to the EIA, U.S. retail gasoline prices averaged $3.14 per gallon in July, its highest level since October 2014, amid relatively low gasoline inventories.