White House Rules Out Gas Tax Hike to Finance Infrastructure Legislation
June 22, 2021
Wells Fargo Investment Institute said oil prices are likely to increase as demand recovers to 2019 levels with the pandemic coming to an end. It stated that considering the amount of money being pumped into global economies these days by central banks, it is reasonable to expect that fuel demand should eventually trend higher than pre-coronavirus levels.
Platts reported that total commercial crude oil stocks are expected to have declined by about 6.3 million barrels in the week ending June 18th. It also reported that strong refinery runs likely contributed to an increase in refined product stocks. Total gasoline stocks likely increased by 1.3 million barrels, while distillates stocks increase by 1 million barrels on the week. The recent gasoline builds have come despite a steady increase in driving demand. Apple Mobility data shows the US driving activity increased to 164% of the index’s January 2020 baseline in the week ending June 18th. The Apple data also showed that US transit ridership averaged 95% of the baseline last week, the highest since the first week of March 2020.
The market is also coming to realize that with the election of the new hard line President in Iran that their sanctioned barrels are not coming to the market anytime soon.
The White House ruled out a gas tax increase to finance a major infrastructure overhaul, arguing it would be a violation of a key campaign pledge on Monday as bipartisan infrastructure talks gain momentum.
There has been a lot of news about the concern of tight supplies in the energy market and this has supported prices. Per Bloomberg they reported an estimated 3 million bpd deficit currently in the global oil market. OPEC + has the delicate job of offering more oil to keep prices from getting to high but also keeping them supported. Reports say that Russia is considering proposing that OPEC+ increase output at the next meeting July 1.
Citigroup analysts see Brent crude oil prices averaging in the high $70 for the rest of the year, with a high probability of reaching $85 per barrel before subsiding with markets rebalancing.