Oil prices were steady on Thursday following two days of gains after a call from the United States, the world’s top oil consumer, for major producers to boost output reinforced supply concerns as economies ease their coronavirus restrictions.
They were also boosted by a pullback in U.S. dollar, which can send speculative investors into greenback-denominated assets like commodities.
U.S. West Texas Intermediate (WTI) crude futures was down 31 cents, or 0.45% to $68.99.
“Oil prices rebounded for a third day as President Joe Biden’s infrastructure plan boosted reflation hopes, underpinning the energy demand outlook,” said Margaret Yang, a strategist at DailyFX.
The U.S. Senate late on Tuesday passed a $1 trillion infrastructure bill that will expand transporation systems and likely lead to a number of energy-consuming constructon projects.
Biden’s administration on Wednesday urged the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to boost oil output to tackle rising gasoline prices that they see as a threat to the global economic recovery.
OPEC agreed in July to boost output each month by 400,000 bpd over the previous month, starting in August, until the rest of their record cuts of 10 million bpd, about 10% of world demand, made in 2020 are phased out.
However, there are still concerns that the increase will not be enough to meet demand as the U.S. and Europe ease their coronavirus-induced movement restrictions.
“The Biden Administration said that the recently agreed production increases will not fully offset previous production cuts imposed during the pandemic,” said ANZ in a note.
Later, the White House said its outreach to OPEC+ is ongoing and aimed at long-term engagement, not necessarily an immediate response.
The administration added it had not called upon U.S. producers to ramp up production, which led the market to turn higher on Wednesday, said Phil Flynn, a senior analyst at Price Futures Group in Chicago.
Other data from the EIA report weighed on prices. U.S. crude oil stockpiles fell modestly last week, out of step with forecasts, while gasoline inventories dipped to their lowest level since November. More volatile weekly demand numbers also declined.