Oil futures started the week on Monday on a weak note, with the US benchmark hanging below $ 80 a barrel as traders assessed the possibility that the Biden government will release crude from the Strategic Petroleum Reserve.
Crude oil futures were sold out in anticipation that the Biden government might consider an clearance from the SPR, along with a "possible ban on oil and / or gasoline exports," Marshall Steeves, energy market analyst at IHS Markit, told MarketWatch . "The SPR publication was promoted over the weekend by Senate Majority Leader [Chuck] Schumer."
Schumer, D-N.Y., Said Sunday the government should tap into the reserve to lower gasoline prices before the holiday season. Thanksgiving in the US, a busy travel season, is next Thursday.
Read: Why tapping into the SPR is one of many "bad" options to bring down gasoline prices
An SPR release was "probably the most likely scenario," said Steeves. "However, it will likely only have short-term effects as it would be a fraction of global production and consumption," he said.
"Plus, it would be more of a one-off event than a sustained spike in production," said Steeves. "It is likely the policy goal of those promoting it to provide some relief over the holidays so that it could have the effect of temporarily falling prices."
West Texas Intermediate Crude Oil for December delivery
fell 53 cents, or 0.7%, to $ 80.26 a barrel on the New York Mercantile Exchange after trading as low as $ 79.30. Front-month prices haven't settled below $ 80 since Nov. 4th, according to FactSet data.
January Brent crude
the global benchmark, fell 64 cents, or 0.8%, to $ 81.53 a barrel on ICE Futures Europe. Both classes fell for a third week in a row last week.
The speculation about a possible SPR publication seems to have done little to shake up key members of the Organization of Petroleum Exporting Countries [OPEC]. Energy ministers from Saudi Arabia and Oman said over the weekend that they see no need for OPEC and its allies – a group known as OPEC + – to accelerate production increases beyond the monthly increases of 400,000 barrels a day they have already earmarked .
There was also talk that the US might consider banning oil exports in order to bring down gasoline prices.
"The export ban is a sensitive issue and could actually cause problems if reciprocated," said Steeves. “Much of the heavier crude oil that is produced in the US is exported because refineries on the Gulf Coast don't want it. That would not help increase the production of lighter crude oil. "
A stronger US dollar also weighed on crude oil. The ICE US dollar index
a measure of the currency versus a basket of six major rivals, rose 0.3% on Monday and rose 1% in November, hitting a nearly 16-month high.
A stronger dollar can adversely affect commodities valued in the unit, making them more expensive for users of other currencies.
December gasoline at other Nymex stores
was trading at $ 2.324 a gallon, up 0.6% while in December fuel oil
fell 0.5% to $ 2.392 a gallon.
December natural gas
traded at $ 4.957 per million UK thermal units, up 3.5%.