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Oil reversed losses to close slightly higher after another day passed without an announcement from the Biden Administration to tap U.S. crude reserves.

Futures in New York closed up 0.1% Monday, paring earlier losses of as much as 1.8%. Biden faces increased pressure from members of his own party to release oil from the Strategic Peroleum Reserve to quell rising gasoline prices. Meanwhile, the U.S. government projected that the country’s shale out would climb 85,000 barrels a day in December. 

“The anticipated SPR release has been largely priced into the market at this point," said Rebecca Babin, senior energy trader at CIBC Private Wealth Management. “As time goes by and the release does not happen the market will likely drift higher."

As the U.S. mulls a crude-supply release, Saudi Arabia and the United Arab Emirates signaled that OPEC+ will continue to be cautious in its plans to raise output. The group has been adding 400,000 barrels a day of production each month on paper, although its members have failed to pump that much in practice so far. The modest release comes as oil has surged to multi-year highs as economic recovery and a global energy crisis have fueled demand. 

The Organization of Petroleum Exporting Countries and its allies are particularly wary about the stability of demand in the coming months. While a handful of smaller European nations have reimposed restrictions as a result of Covid-19 cases, the U.K. expanded its booster shot program in hopes of heading off a winter resurgence that would force other contingency measures to stem the spread.  

The Biden Administration’s deliberations to release oil from the SPR comes as gasoline prices have hit a seven-year high, a political problem for Democrats who are experiencing sinking approval ratings. Gasoline prices in California, the most populace state, reached an all-time high Monday, according to AAA data. Even climate conscious Democratic senators urged the President to act quickly to dampen prices by either tapping SPR or banning U.S. crude exports. 

Meanwhile, supplies at the largest U.S. shale patch is set to increase nearly 5 million barrels a day in December, according to a U.S. government report Monday. That surpasses the record set in March 2020, right before the pandemic unleashed widespread demand destruction globally, triggering production shutdowns and bankruptcies across the U.S. 

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