SINGAPORE – Oil held gains as the market shrugged off measures from US President Joe Biden to tame rising energy prices that have fuelled inflation.

West Texas Intermediate crude for December traded near US$85 a barrel after rising 3 per cent on Wednesday.

Mr Biden confirmed the release of 15 million barrels from the US strategic reserve and said more supplies could be tapped, but did not announce any other actions such as curbing fuel exports.

Crude has been whipsawed by concerns over a global economic slowdown and the prospect for further tightening following output cuts from November by the Organisation of Petroleum Exporting Countries and its allies. European Union sanctions on Russian seaborne oil exports that take effect in December have added another layer of uncertainty to supply.

Fuel stockpiles are tightening in places from Europe to the United States. America is down to 25 days of diesel supply, the lowest level since 2008, as consumption of the fuel surges heading into winter, according to the Energy Information Administration. The nation’s crude inventories also fell by 1.73 million barrels last week. 

However, there are questions about China’s demand outlook as the world’s top crude importer sticks with its Covid-19-zero strategy. Infections have swelled in Beijing to the highest in four months, stoking concerns about potential curbs as the flare-up worsens in the middle of the twice-a-decade Communist Party Congress.

“Ultimately, economic gloom is bound to overtake and knock back prices more,” said Mr Vishnu Varathan, head of economics and strategy at Mizuho Bank. “But until then, oil is playing a game of chicken with recession risks.”

Mr Biden also scolded oil producers, stating that they should not be returning record profits to shareholders via higher buybacks and dividends while Russia wages war in Ukraine. The windfall should instead be used by the companies to increase output, he said on Wednesday at the White House. BLOOMBERG