Oil was down Tuesday morning in Asia. However, stronger fuel demand as the U.S. passed a massive infrastructure bill capped losses for the black liquid.
The U.S. Congress passed President Joe Biden’s long-delayed $1 trillion infrastructure bill passed through Congress over the weekend. Sunday’s better-than-expected export data from China also bolstered fuel demand.
Global demand for oil in November was already nearly back to pre-COVID levels of 100 million barrels per day (bpd), JPMorgan Chase (NYSE:JPM) analysts said in a note. “More consumption growth lies in wait once travel begins in earnest and jet fuel demand picks up.”
However, “the big unknown is whether economies can achieve growth amid the current high price environment, or potentially in an even higher price scenario,” Rystad Energy senior oil markets analyst Louise Dickson told Reuters.
Oil hit a seven-year high as major producers maintained strict supply discipline in October, and fuel values also rose. The Organization of the Petroleum Exporting Countries (OPEC+) is sticking to its plan to increase supply at a rate of 400,000 barrels a day for now. The U.S. and other consumers such as Japan and India have called on the cartel to accelerate their output.
U.S. Energy Secretary Jennifer Granholm said on Monday that Biden may take measures as early as this week to address soaring gasoline prices. “He’s certainly looking at what options he has in the limited range of tools a president might have to address the cost of gasoline at the pump because it is a global market,” Granholm told MSNBC.
Investors now await U.S. crude oil supply data from the American Petroleum Institute and the U.S. Energy Information Administration, due later in the week. “If the U.S. doesn’t get OPEC+ to respond to its pledge for more output, it has its own arsenal of tools to deploy to battle high prices of refined oil products,” Dickson said.