TOKYO: U.S. oil was under pressure in early Asia trade on Thursday after slumping overnight on a Reuters report that the United States was asking major oil consumers like China and Japan to consider a coordinated release of oil reserves to lower prices.
The bid by the U.S. administration to shock markets comes as inflationary pressures, partly driven by surging energy prices, starts to produce political backlash, as the world fitfully recovers from the worst health crisis in a century.
U.S. crude was down 6 cents at $78.30 at 1145 GMT Wednesday time, having fallen 3% overnight. Brent crude fell 2.6% to the lowest close since early October and was yet to trade in Asia.
Prices hit seven-year highs last month as the market focused on the swift rise in demand that has come with lockdowns being lifted and economies recovering against a slow increase in supply from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, called OPEC+.
U.S. producers have also been reluctant to overspend on drilling after they were punished by investors for gorging on debt to pay for new drills.
The International Energy Agency and OPEC have said in recent weeks that more supply will be available in the next several months. OPEC+ is maintaining an agreement to boost output by 400,000 bpd every month so as not to flood the market with supply.
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