Sonali Paul

MELBOURNE (Reuters – Oil prices plunged on Wednesday as U.S. gasoline stock fell further than anticipated last week. This may increase the pressure on President Biden to draw down oil reserves in an emergency to curb rising gasoline prices.

U.S. West Texas Intermediate’s crude futures declined 0.9% or 76 cents to $80.00/barrel at 0211 GMT. That is an additional 12 cent loss since Tuesday.

Futures lost 72 cents or 0.9% to $82.71, ending a 38-cent gain on Tuesday.

U.S. President Joe Biden considered releasing oil from Strategic Petroleum Reserve to help lower gasoline prices. California has seen record-breaking levels this week at the pumps. However, lawmakers have differing views about whether this is necessary.

StenyHoyer, the U.S. House Majority leader, said Tuesday night that he didn’t agree with Chuck Schumer’s Sunday call for taping the SPR in order to lower gas prices. He stated that the reserve was meant to provide a source of supply during times of crisis.

Analysts believe that SPR oil will only provide temporary relief. What is required is an increase in supply by U.S. shale producer or the Organization of the Petroleum Exporting Countries.

Edward Moya from OANDA said that “It appears the energy market believes that even if America taps the Strategic Petroleum Reserve… the benefits would not be minimal… for the U.S. consumers.”

According to sources, data from American Petroleum Institute showed that gasoline stocks dropped by 2.8 Million barrels in the week ending Nov. 12.

This drawdown was far greater than that 600,000 barrel reduction 10 analysts polled at Reuters expected.

According to market sources, crude inventories increased by 655,000 barrels. This was below analysts’ estimates for an increase of 1.4million barrels.