US speeds up purchasing for Strategic Petroleum Reserve as oil prices dip
2024.06.07 15:58
By Timothy Gardner
WASHINGTON (Reuters) -The administration of President Joe Biden said on Friday it has sped up offers to replenish for the Strategic Petroleum Reserve following its historic sale from the stockpile in 2022.
Energy Secretary Jennifer Granholm said in an exclusive interview on Tuesday that the department could speed replenishment of the SPR this year, beyond a roughly 3 million barrer month pace.
“It could pick up more than that,” Granholm told Reuters in the interview. Two of the SPR’s four sites on the coasts of Texas and Louisiana have been in maintenance, slowing purchases.
“All four sites will be back up by the end of the year, so one could imagine that pace would pick up, depending on the market,” Granholm said.
The Department of Energy on Friday issued two solicitations to buy a total of 6 million barrels of crude oil for delivery to the Bayou Choctaw site in Louisiana from September through December. If those offers, and previously announced ones, are fulfilled, it could mean the pace will increase to about 4.5 million barrels per month for September, October and November.
The Biden administration in 2022 announced a record sale of 180 million barrels from the SPR after Russia’s invasion of Ukraine. The move was an effort to control gasoline prices that spiked to more than $5.00 a gallon after the invasion. But it also pushed down the level of the SPR to the lowest in 40 years.
The DOE wants to buy back oil for the reserve at about $79 a barrel. West Texas Intermediate crude futures were well below that at about $75 on Friday, falling for a third straight week on concerns about demand.
“At a time of relative crude weakness, the department is adding 50,000 barrels per day to SPR demand,” to 150,000 bpd for the reserve, equal to about the demand of a medium-size U.S. refinery, said Kevin Book, an analyst at ClearView Energy Partners.
The DOE this year moved to a direct purchase strategy of oil for the reserve instead of basing the purchasing price on an index. That and the completion of maintenance at Bayou Choctaw has helped it buy 38.6 million barrels of oil for at an average of $77 per barrel, it said.
