Oil slips from 7-year high with Biden pledging to tackle prices

HONG KONG (BLOOMBERG) - Oil retreated from the highest close since 2014 on Thursday (Jan 20) after United States President Joe Biden pledged to continue trying to lower prices and an industry report pointed to a modest increase in US crude stockpiles.

Futures in New York slipped towards US$86 a barrel after advancing almost 6 per cent over the past three sessions. While Mr Biden does have some options to address the increase in oil prices, many of them would be limited and likely be short-lived. The American Petroleum Institute reported US crude inventories rose by 1.4 million barrels last week, according to people familiar with the data.

Oil has rallied around 30 per cent since the end of November as stronger-than-expected demand and supply outages significantly tightened the market, leading to buyers in Asia paying sharply higher premiums for spot cargoes.

Goldman Sachs Group is forecasting a return to US$100 crude in the third quarter, and the International Energy Agency said in a report on Wednesday that demand is on track to hit pre-pandemic levels.

Mr Biden told reporters on Wednesday that the administration would work on trying to increase supplies that are available, adding that it would be hard. That followed comments on Tuesday that the authorities were working with oil-producing countries to ensure that supply rises to meet demand.