The Bryan Mound Strategic Petroleum Reserve is seen in an aerial
photograph over Freeport, Texas
By Arathy Somasekhar
By Arathy Somasekhar
Mon, September 12, 2022
HOUSTON (Reuters) -U.S. emergency crude oil stocks fell 8.4 million barrels last week to 434.1 million barrels, their lowest since October 1984, according to U.S. Department of Energy (DOE) data released on Monday.
The release from the Strategic Petroleum Reserve (SPR) in the week ended Sept. 9 was the steepest draw since May. It comprised of about 6.3 million barrels of sweet crude and around 2 million barrels of sour crude.
President Joe Biden in March set a plan to release 1 million barrels per day over six months from the SPR to tackle high U.S. fuel prices, which have contributed to soaring inflation.
The Biden administration is weighing the need for further SPR releases after the current program ends in October, Energy Secretary Jennifer Granholm told Reuters last week. A DOE spokesperson later said the White House at that time was not considering new releases beyond the 180 million barrels.
The Biden administration is less likely to release barrels from the SPR after October if benchmark oil futures continue to drop. Last week, the 50-day moving average of U.S. and European prices both fell below the 200-day moving average, noted research analyst Paul Sankey said.
The SPR stocks also have declined due to sales from congressional mandates and Biden's price initiative. The oil is sold to qualified oil companies via online auctions, and prices set using a five-day average bracketing the date of delivery.
The DOE has proposed to replenish the SPR by allowing it to enter contracts to purchase oil in future years at fixed, preset prices. The administration said it believes the plan would help boost domestic oil production.
HOUSTON (Reuters) -U.S. emergency crude oil stocks fell 8.4 million barrels last week to 434.1 million barrels, their lowest since October 1984, according to U.S. Department of Energy (DOE) data released on Monday.
The release from the Strategic Petroleum Reserve (SPR) in the week ended Sept. 9 was the steepest draw since May. It comprised of about 6.3 million barrels of sweet crude and around 2 million barrels of sour crude.
President Joe Biden in March set a plan to release 1 million barrels per day over six months from the SPR to tackle high U.S. fuel prices, which have contributed to soaring inflation.
The Biden administration is weighing the need for further SPR releases after the current program ends in October, Energy Secretary Jennifer Granholm told Reuters last week. A DOE spokesperson later said the White House at that time was not considering new releases beyond the 180 million barrels.
The Biden administration is less likely to release barrels from the SPR after October if benchmark oil futures continue to drop. Last week, the 50-day moving average of U.S. and European prices both fell below the 200-day moving average, noted research analyst Paul Sankey said.
The SPR stocks also have declined due to sales from congressional mandates and Biden's price initiative. The oil is sold to qualified oil companies via online auctions, and prices set using a five-day average bracketing the date of delivery.
The DOE has proposed to replenish the SPR by allowing it to enter contracts to purchase oil in future years at fixed, preset prices. The administration said it believes the plan would help boost domestic oil production.
Biden Officials Weigh Buying Oil at Around $80 to Refill Reserves
Jennifer Jacobs, Saleha Mohsin and Annmarie Hordern
Tue, September 13, 2022
(Bloomberg) -- The US may begin refilling its emergency oil reserve when crude prices dip below $80 a barrel, according to people familiar with the matter.
Biden administration officials are weighing the timing of such a move, with an eye toward protecting US oil-production growth and preventing crude prices from plummeting, said the people, who asked not to be named sharing internal deliberations.
The discussions come as West Texas Intermediate, the U.S. benchmark, plunged to almost $81 a barrel last week, its lowest level since January. While President Joe Biden in March ordered the release of an historic 180 million barrels from the Strategic Petroleum Reserve -- an effort to tame skyrocketing oil and gas prices -- officials are now aiming to slow those releases to keep the market in check heading into the winter.
At the same time, officials are trying to reassure oil producers that the administration won’t let prices collapse amid intense volatility that’s fueled massive daily swings. Buying crude to refill the reserve, which is now at the lowest level since 1984 after a record drawdown last week, would be supportive for the market.
WTI pared losses to trade near $87 a barrel on the news on Tuesday.
White House and Energy Department communication staff didn’t immediately respond to requests for comment.
Julia Fanzeres and Ilena Peng
Tue, September 13, 2022
(Bloomberg) -- Oil settled close to a one-week high as news of a US plan to refill emergency crude reserves largely offset broader inflation concerns.
President Joe Biden’s administration is considering restocking the Strategic Petroleum Reserve when crude falls below $80 a barrel, Bloomberg News reported on Tuesday. The news revived West Texas Intermediate futures that had earlier dipped as low as $85 on bearish inflation data.
The White House has been releasing emergency reserves in recent months to plug supply gaps as war and geopolitical turmoil around the world disrupted traditional sources of crude.
“It may not be a catalyst for $100 crude but does offer a buffer to the downside risk that the market is worrying about,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Management.
Earlier on Tuesday, prices fell alongside equities after the release of worse-than-expected inflation figures for August.
Crude prices earlier this month dropped to the lowest since January with the US dollar rallying to record highs as central banks prepared for more interest-rate hikes. Fundamental headwinds remain as Saudi Arabia told OPEC it raised crude production above 11 million barrels a day for the first time in more than two years, while investors are fretting about global consumption as top importer China battles virus outbreaks.
“We do not expect a sustained rally soon, but estimate the risk/reward outlook has improved again,” Morgan Stanley analysts including Martijn Rats and Amy Sergeant said in a note. “The oil market’s structural outlook remains one of tightness, but for now, this is offset by cyclical demand headwinds.”
Some leading banks have been scaling back oil-price expectations. Morgan Stanley reduced its Brent price forecasts for this quarter and next, according to a note, following a similar move by UBS Group AG earlier this week. JPMorgan Chase & Co., however, reiterated its call for $150 crude on Bloomberg TV, noting that China’s demand will revive once pandemic-related lockdowns are lifted, while international explorers aren’t investing enough to replace reserves.
Separately, US Secretary of State Antony Blinken said it was “unlikely” the US and Iran would reach a new nuclear deal anytime soon, echoing recent comments from France, Germany and the UK, and pushing back the likelihood of any substantial increase in Iranian oil shipments in the near term.
No comments:
Post a Comment