The U.S. government projected that the global oil market will become oversupplied and prices will fall by early next year, cooling expectations that the White House may tap the nation’s emergency reserves.

Supply increases next year from OPEC nations as well as U.S. drillers will ultimately pressure prices lower. The U.S. benchmark crude will fall below US$80 a barrel by December and reach as low as US$62 by the end of next year and its global counterpart Brent will average US$72 a barrel in 2022, the Energy Information Administration said in its Short-Term Energy Outlook on Tuesday. U.S. pump prices will drop below US$3 a gallon by February, the data show.

“We forecast that global oil stocks will begin building in 2022, driven by rising production from OPEC+ and the United States, along with slowing growth in global oil demand,” the EIA said.

The Biden administration has been under pressure to act to suppress rising gasoline prices that are now at the highest levels since 2014. But the report may weaken the argument for a release of oil from the U.S. Strategic Petroleum Reserve, a move that had been seen as the most direct action U.S. President Biden could take to drive down prices, especially after OPEC and its allies resisted Biden’s calls to bring more crude supplies into the global market…read more.