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Oil Down as Biden Aims to Bring Down U.S. Fuel Cost

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© Reuters.

By Zhang Mengying

Investing.com – Oil was down on Wednesday morning in Asia as U.S. President Joe Biden is set to push for U.S. fuel cost cuts.

Brent oil futures slid 3.03% to $111.18 by 12:40 AM ET (4:40 AM GMT) and crude oil WTI futures dived 3.37% to $105.83.

U.S. President Joe Biden is expected on Wednesday to call on Congress to temporarily suspend a federal tax on gasoline to bring down soaring fuel prices and alleviate the pressure on consumers.

“Even oil traders acknowledged that higher oil prices hence higher gasoline prices would lead to a more aggressive tag team onslaught from the (U.S.) Fed pushing rates higher and the Biden administration getting increasingly more creative on the political and fiscal front to tame the energy inflation beast,” SPI Asset Management managing partner Stephen Innes told Reuters.

Seven oil companies are set to meet Biden on Thursday, under pressure from the White House to bring down fuel prices.

However, energy company Chevron’s Chief Executive Officer Michael Wirth said on Tuesday that criticizing the oil industry was not the way to lower fuel prices.

“These actions are not beneficial to meeting the challenges we face,” Wirth said in a letter to Biden.

Elsewhere, since European oil sanctions on Russia for its invasion of Ukraine haven’t taken effect, the supply is set to get tighter.

“The market is still coming to terms with the increasing disruption to Russian oil. European sanctions have yet to kick in,” ANZ Research analysts said in a note.

Commodities

Oil up 2% on Bets G7 Move Versus Russia Will Further Tighten Supply 

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© Reuters.

By Barani Krishnan

Investing.com — Crude markets rallied on Monday on speculation that the predominantly-Western Group of Seven (G7) nations might further tighten the flow of oil to their shores in a move to abandon Russian supplies.

Russia, meanwhile, staged its biggest attack in months on Ukrainian civilians, reportedly killing as many as 1,000 of them after firing rockets at a mall in Kremenchuk. 

The prospect of oil being further constricted into the West loomed as leaders of the G7 — made up of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States — discussed at their meeting in Bavaria, Germany, ways to cut Russia’s ability to fund its war in Ukraine. US President Joe Biden is to meet Germany’s Chancellor Olaf Scholz, France’s President Emmanuel Macron and UK’s Prime Minister Boris Johnson on June 28th on the margins of the G7 summit.

New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled up $1.95, or 1.8%, at $109.57 per barrel.

London-traded Brent crude, the global benchmark for oil, settled up $1.97, or 1.7%, at $115.09.

“There are numerous geopolitical chess pieces being moved around the board that are supporting oil, though the play could shift the other way any moment,” said John Kilduff, partner at New York energy hedge fund Again Capital.

Members of the Organization of the Petroleum Exporting Countries and their allies including Russia, known as OPEC+, will put out 50% more oil in July than in June. 

But the 23-nation alliance, led by Saudi Arabia and supported by Russia, also trimmed its projected 2022 oil market surplus to 1 million barrels per day from a previous estimate of 1.4 million, according to an internal report seen by Reuters.

Crude prices were down earlier in the day on reports that G7 was also discussing prospects of reviving stalled nuclear talks with Iran in an effort to find a workaround to the crisis caused by the sanctions on Russian oil.

Some investors in oil also appeared hesitant to put on major positions after the U.S. Energy Information Administration said its weekly inventory report will be delayed for a second straight week due to server issues.

The EIA’s globally-followed Weekly Petroleum Status Report missed publication on June 24 and will not be released again as slated on June 29. The agency, however, said all its data was intact and it will resume publication “as soon as possible.”

The EIA however reported separately that it released 6.9 million barrels of crude from the U.S. Strategic Petroleum Reserve last week as it relied on the emergency reserve to bridge the supply tightness that has sent domestic gasoline prices to all-time highs above $5 per gallon. 

The latest release pushed the SPR inventory level below the 500 million barrel mark for the first time since 1986, Bloomberg reported.

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Brazil’s Petrobras elects new CEO as fuel price pressures mount

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© Reuters. FILE PHOTO: Gasoline and diesel prices are displayed near a gas station, following the announcement of updated fuel prices, at the Brazilian oil company Petrobras in Brasilia, Brazil June 18, 2022. REUTERS/Ueslei Marcelino/File Photo

By Rodrigo Viga Gaier and Rafaella Barros

RIO DE JANEIRO (Reuters) – The board of directors of Brazil’s Petrobras elected Caio Paes de Andrade as its new chief executive on Monday, as a messy management transition at the state-run oil company inches toward conclusion.

Andrade, a former economy ministry official, was also voted onto the company’s board ahead of his election as CEO, the company said in a securities filing, a move required under Petrobras bylaws.

Andrade had been tapped by Brazilian President Jair Bolsonaro last month to run the firm and is set to replace Chief Exploration and Production Officer Fernando Borges, who took over as interim CEO after Jose Mauro Coelho resigned earlier this month.

Coelho, as well as his two predecessors, were brought down after clashes with Bolsonaro over the company’s fuel pricing policy. The far-right president’s popularity has taken a beating due to rising diesel and gasoline prices and high inflation.

Of particular interest to investors will be any potential changes to the company’s current policy of partially pegging domestic fuel prices to international rates.

The incoming CEO told a corporate committee last week that he had not received any guidance from the government regarding changing the firm’s pricing policy.

In an interview late on Sunday, however, Bolsonaro said that Andrade had agreed with Mines and Energy Minister Adolfo Sachsida to run a “quick x-ray of Petrobras and reveal exactly what the PPI (import parity price) is.”

“He will tell if fuel prices need to be readjusted immediately or if there is a grace period,” Bolsonaro said.

Reuters reported earlier, citing sources, that the board had approved Andrade’s nomination in a 7-3 vote.

In the Monday filing, the company said his term will last until April 13, 2023.

Brazil-listed preferred shares in Petrobras were frozen before the announcement. They had gained 5.82% in intraday trade, after analysts at Itau BBA resumed coverage of the company with an “outperform” rating.

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Commodities

Oil prices rise amid G7 talks on new Russian sanctions

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© Reuters. FILE PHOTO: Crude oil storage tanks are seen at the Kinder Morgan terminal in Sherwood Park, near Edmonton, Alberta, Canada November 14, 2016. REUTERS/Chris Helgren

By Arathy Somasekhar

HOUSTON (Reuters) -Oil prices traded higher on Monday in a volatile session as investors waited for any moves against Russian oil and gas exports that might come out of a meeting of leaders of the Group of Seven (G7) nations in Germany.

Brent crude futures rose $1.73, or 1.5%, to $114.82 a barrel by 12:25 p.m. ET (1725 GMT), while U.S. West Texas Intermediate crude was up $1.71, or 1.5%, at $109.25 a barrel.

The prospect of even tighter supplies loomed over the market as western governments sought ways to cut Russia’s ability to fund its war in Ukraine, even though G7 leaders were also expected to discuss a revival of the Iran nuclear deal, which might lead to more oil exports from the OPEC member. ()

The club of wealthy nations on Monday vowed to stand with Ukraine “for as long as it takes”, promising to tighten the squeeze on Russia’s finances with new sanctions that include a proposal to cap the price of Russian oil.

“I think if they were to implement a price cap on sale and purchase of Russian oil, it’s difficult for me to imagine how this is going to be implemented, especially when China and India have become Russia’s biggest customers,” said Houston-based oil consultant Andrew Lipow.

Commonwealth Bank of Australia (OTC:CMWAY) analyst Vivek Dhar noted that there was “nothing stopping Russia from banning oil and refined product exports to G7 economies in response to a price cap, exacerbating shortage conditions in global oil and refined product markets.”

Both crude benchmarks closed down for the second week in a row on Friday as interest rate hikes in key economies strengthened the dollar and fanned fears of a global recession.

Recession and interest rate hike fears have caused volatility and risk aversion in the futures markets, with some energy investors and trader paring back, while prices in the spot crude market has remained strong on high demand and a supply crunch.

But for now, pressing supply worries outweighed growing concerns.

Members of the Organization of the Petroleum Exporting Countries and their allies including Russia, known as OPEC+, will likely stick to a plan for accelerated oil output increases in August when they meet on Thursday, sources said.

The producer group also trimmed its projected 2022 oil market surplus to 1 million barrels per day (bpd), down from 1.4 million bpd previously, a report seen by Reuters showed.

OPEC member Libya said on Monday it might have to halt exports in the Gulf of Sirte area within 72 hours amid unrest that has restricted production.

Adding to the supply woes, Ecuador also said it could suspend oil production completely within 48 hours amid anti-government protests in which at least six people have died.

Traders also awaited news on when market-moving U.S. government oil inventory and other data would be published after it was not released last week due to server issues.

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