Joe Biden and Xi Jinping discuss tandem U.S.-China oil stockpile release

(Bloomberg) --Oil fell as investors weighed the chances that the Biden administration may tap emergency reserves in a coordinated move with nations such as China, and a mixed report on U.S. stockpiles.

President Joe Biden has been weighing the merits of releasing oil from the Strategic Petroleum Reserve to try to quell gasoline prices. A release by China was raised by the U.S. during this week’s virtual summit with President Xi Jinping, the South China Morning Post reported, citing an unidentified person. Beijing is open to the request but hasn’t committed to specific actions, it said.

Read more: Oil prices fall to six-week low on prospect of strategic crude releases

The Xi-Biden summit lasted 3 1/2 hours, and covered a host of issues including energy security. The U.S. request to China to release oil reserves was part of talks on economic cooperation, the South China Morning Post said. The matter was also discussed during an earlier phone conversation between Chinese Foreign Minister Wang Yi and U.S. Secretary of State Antony Blinken, it said.

In the U.S., crude in the tanks at Cushing -- the delivery point in Oklahoma for WTI futures -- has sunk to a three-year low after dropping for the past five weeks, according to official data from the Energy Information Administration.

The industry-funded American Petroleum Institute reported nationwide crude inventories rose 655,000 barrels last week, according to people familiar with the data. However, the report also showed a draw in oil at the hub at Cushing, as well as lower gasoline holdings. Official figures come later on Wednesday.

After hitting a seven-year high last month crude has eased, and traders are trying to figure out the market’s likely trajectory into 2022. The International Energy Agency said this week while demand growth remains robust, supply is catching up. Meanwhile, the Organization of Petroleum Exporting Countries said a surplus may soon emerge as the rebound from the pandemic falters.

Prices:

• WTI for December delivery dropped 0.6% to $80.30 a barrel on the New York Mercantile Exchange at 9:09 a.m. in Singapore.
• Brent for January settlement lost 0.5% to $82.06 a barrel on the ICE Futures Europe exchange.

The oil market remains backwardated, a bullish pattern marked by near-term prices trading at a premium to longer-dated ones. Brent’s prompt spread was $1.01 a barrel in backwardation on Tuesday, little changed from the level on Monday.