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Why Are Oil Prices Down Today?

  • Oil prices are falling partly due to anticipated actions by the Biden administration.
  • Administration officials are slated to meet with oil executives tomorrow.
  • Worries about a U.S. recession are also pushing oil prices down.
Oil prices down - Why Are Oil Prices Down Today?

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Oil prices are sinking today amid anticipation of actions that the Biden administration is expected to take and worries about a recession in the U.S. With oil prices down over 5%, the price of West Texas Intermediate (WTI) crude is closing in on $100 per barrel.

Anticipated Government Actions Are Lowering Oil Prices

President Joe Biden is expected to call later today for a suspension of the federal gasoline tax. The tax amounts to 18.4 cents per gallon. Additionally, the anticipation of a meeting among Biden administration officials and the leaders of U.S. oil companies  is reportedly pushing oil down. Since the administration has harshly criticized the U.S. fossil fuel sector, oil traders may believe that the firms will agree to increase their oil and gasoline output during the meeting.

Finally, Bloomberg is reporting that the administration may place limits on “fuel exports” from the U.S. Such an action would increase the amounts of oil and gasoline available to Americans, putting downward pressure on oil prices.

Worries About a U.S. Recession and Slowing China Growth

Increased fears about a recession in the U.S. and other countries also appear to be pushing oil prices down this morning. In the wake of the Federal Reserve’s decision last week to increase its benchmark interest rate by 0.75 of a percentage point, Citigroup analysts have raised their estimate of the odds of a recession in the U.S. to nearly 50%.

“The experience of history indicates that disinflation often carries meaningful costs for growth, and we see the aggregate probability of recession as now approaching 50%,” the bank stated.

Meanwhile, slowing economic growth in China is also being seen as putting downward pressure on oil prices.

In early trading, WTI fell $6.01, or 5.5%, to $103.50.

The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.

Article printed from InvestorPlace Media, https://investorplace.com/2022/06/why-are-oil-prices-down-today/.

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