Oil futures rebounded on Thursday, as the market deemed it unlikely that the United States would release emergency crude reserves or ban exports to ease tight supplies.
Brent futures rose 87 cents, or 1.1%, to settle at $81.95 a barrel, while US crude gained 87 cents, or 1.1%, to settle at $78.30 a barrel. Earlier in the day prices at both benchmarks dropped $2 a barrel.
The US Department of Energy said all “tools are always on the table” to tackle tight energy supply conditions in the market.
The department made the comment amid questions about whether President Joe Biden's administration is considering tapping into its Strategic Petroleum Reserves (SPR) or pursuing a ban on oil exports to bring down the cost of crude oil.
Meanwhile, Biden's national security adviser urged energy suppliers to lift flows to meet demand, saying that the United States is concerned about their failure to do so.
The United States has used its strategic reserves on occasion, usually after hurricanes or other supply disruptions. However, since ending a 40-year ban on crude exports in 2015, the nation has become a significant exporter, and has not broached cutting exports.
Earlier this week, the Organization of the Petroleum Exporting Countries and allies (OPEC+) agreed to raise output only gradually, sending crude prices to multi-year highs.
Oil markets have been on a steady rise due to tight supplies worldwide as demand recovered more quickly than expected from the COVID-19 pandemic in big import markets like China.
“The oil market is looking tighter in the short term, which suggests that prices will remain well supported until the end of the year,” ING analyst Warren Patterson said in a note.
Major producers and the International Energy Agency believe crude demand could rise by anywhere from 150,000 to 500,000 barrels per day in coming months as users of natural gas switch to oil due to high gas prices.