The US Department of Energy yesterday said it wants to buy up to 3 million barrels of crude oil for the Strategic Petroleum Reserve (SPR) for delivery in March 2024, as it takes advantage of lower prices to start to replenish the stockpile.
The administration of President Joe Biden last year conducted the largest sale to date from the SPR of 180m barrels to try to limit an oil price rally after Russia’s war on Ukraine began in February 2022.
The Energy Department in October said it would buy back oil for the reserve at $79 per barrel or lower, after it had received an average of about $95 a barrel from last year’s emergency sales. It plans to release monthly offers to buy crude for the emergency stash through May next year.
The new solicitation is for sour crude and the delivery will be received by the Big Hill SPR site in Texas.
The department has bought back nearly 9m barrels for the reserve at about $75 a barrel. It has also secured the return of nearly 4m barrels by February, several months ahead of schedule, from a previous exchange with oil companies.
Department officials have said that the return of oil is being tempered by planned life extension maintenance at the SPR, where oil is held in hollowed-out salt caverns on the Texas and Louisiana coasts. The reserve currently holds 351.9m barrels of oil.
Meanwhile, oil rebounded as technical levels provided support and the US sought to refill its strategic reserve, but still remained on course for the longest weekly losing streak since 2018 on concerns about a global glut.
West Texas Intermediate rose as much as 3.3 per cent to top $71 a barrel. Still, crude is on pace for its seventh straight weekly drop, and widely watched timespreads are mired in bearish contango structures to the middle of next year. That rout had led oil to close in oversold territory on its relative strength index on Thursday, a condition that often supports a technical rebound.
&uuid=(email))