By Irina Slav of OilPrice.com
The latest crude oil purchase that the Department of Energy made as part of refill plans for the strategic petroleum reserve cost an average of over $81 per barrel, exceeding the $79 ceiling set by the federal government.
Per an Argus report, the DoE declined to comment on why it had bought the oil despite the higher price hinting at more news to come later today.
Back in 2022, to arrest an inexorable climb in retail fuel prices, the White House announced a release of 180 million barrels of crude oil from the strategic petroleum reserve. Critics warned the move would have a limited effect on prices but compromise the energy security of the country by reducing the level of crude in the SPR.
The final amount of oil released from the SPR ended up exceeding 180 million barrels with the DoE pledging to replenish the reserve in a timely fashion but only when prices were favorable. The SPR is currently close to a 40-year low as a result of the massive release.
The replenishing effort has been going on slowly, with three million barrels bought there and another three bought here as the very news of a planned purchase led to an uptick in prices.
WTI is $73 now https://t.co/lqzYBr9S9Q
— Joe Weisenthal (@TheStalwart) November 16, 2023
This forced the department to update the price range, at which it would be buying, raising the top end from $72 per barrel last year to $79 per barrel. Yet oil prices have been on a climb recently and WTI broke the $80-yer-barrel threshold earlier this month.
As of March 22, the SPR stood at 363 million barrels of crude, Argus reported, citing Energy Secretary Jennifer Granholm as saying that it should be back to normal by the end of the year. This, however, will not be a result of the replenishment effort but of the cancellation of 140 million barrels in previously planned SPR sales for the period to 2031.
