U.S. oil prices fell to a six-week low Thursday amid reports that President Joe Biden has asked other major world leaders to authorize the release of petroleum reserves to boost global supplies and offset the impact of OPEC production cuts.
The request comes amid near-record gas prices in the United States and an ongoing energy crunch in China that has hit factory output and added new pressures to global supply chains. OPEC, in the meantime, has stuck to its plans for only a modest paring of production cuts, which have helped lift global crude prices to the highest levels in seven years last month.
"It is this growing discontent amongst key consuming nations (particularly the US), which appears to be making market participants nervous, that we could see some form of action to bring oil prices lower," said ING's head of commodities strategy Warren Patterson.
"While a release from the (Strategic Petroleum Reserve) would only provide some short-term relief to the market, that may be all that is necessary, given the expectation that the global oil market could return to surplus as early as (the first quarter of next year)," he added.
WTI futures for December delivery were marked 21 cents lower on the session at $78.15 each while Brent crude contracts for January, the global benchmark, edged 6 cents higher to $80.34 per barrel.
U.S. gasoline prices, meanwhile, hit $3.39 a gallon last week, according to data from the St. Louis Federal Reserve, the highest since October of 2014.
Oil prices have rallied more than 50% this year, to the highest levels since 2014, as both the China and European energy crunch triggers fresh crude buying - a dynamic OPEC leaders have largely dismissed as the hold to previous plans that only include modest changes to the cartel's daily production targets.
The U.S. lead a coordinated release of petroleum reserves in 2011, but the addition of China in the current effort -- which follows a virtual summit between Biden and President Xi Jinping earlier this week -- would mark unprecedented cooperation from the world's biggest energy importer.
Oil was also pressured by data from the Energy Department yesterday showing domestic crude inventories falling by 2.1 million barrels last week, as exports rebounded on renewed global demand.