The U.S. EIA reported that 4.7 million barrels of crude oil left the Strategic Petroleum Reserves in the week ending December 9, but now the United States has started the process of refilling the nation’s SPR.
While 3 million barrels is a far cry from the 211 million barrels released so far this year, the gesture could be seen by some in the industry as proof that the Biden Administration intends to keep its work to refill when prices fall below $70 per barrel—on a consistent basis, energy security advisor Amos Hochstein said earlier this month.
The Administration said at the beginning of this month that it was looking to halt all sales from the SPR that were mandated by Congress in order to make way for refilling. There are 147 million barrels set to be released, per a Congressional mandate between 2024 and 2027.
“It doesn’t make sense for us to be releasing oil while we’re trying to refill the SPR,” Doug MacIntyre, the Department of Energy’s Deputy Director for the Office of Petroleum Reserves, said in testimony before the Energy and Natural Resources Committee earlier this month. “We can’t fill and release from the same site at the same time.”
The purchase of the 3 million barrels will be for a February delivery. While oil isn’t trading at $70 per barrel, WTI has slipped to $74.66 per barrel as of Friday.
U.S. oil drilling activity has fallen for two weeks in a row, according to the most recent Baker Hughes data, with 620 oil rigs in operation in the United States. It is about 100 rigs more than what was in operation when Russia invaded Ukraine earlier this year, but more than 220 rigs shy of what was in operation before the pandemic started in 2019.
By Julianne Geiger for Oilprice.com
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2022-12-16 18:45:00
