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.