GUSH - U.S. scraps latest offer to replenish emergency oil reserve

2023-08-02 06:43:36 ET

The U.S. government has withdrawn its offer to buy 6M barrels of oil for the Strategic Petroleum Reserve as crude prices continue to rise amid tighter supplies in the wake of production cuts by Saudi Arabia and Russia.

The Energy Department made the purchase offer on July 7 and had said it would "pursue additional repurchase opportunities as market conditions allow." After the offer was withdrawn, a spokesperson said the department "remains committed to its replenishment strategy."

The government released a record 180M barrels from the SPR in 2022 to rein in gas prices that surged after Russia's invasion of Ukraine. It later said it would replenish the reserve once prices are at or below $67-$72 per barrel, with 6.3M barrels reportedly bought back in recent months.

Energy Secretary Jennifer Granholm previously told CNN that it's "definitely possible" that the government will ramp up SPR buys, but warned that a complete refill is unlikely any time soon. The spokesperson quoted above clarified that the aim is to recover the 180M released last year.

U.S. crude prices also just saw their best monthly gain in over a year, with the benchmark WTI crude oil trading above $80/bbl. Prices will likely rise further as Saudi extended its production cut , while Russia will cut exports by 500K bbl/day. This is in addition to cuts announced by OPEC+ countries .

Moreover, latest data showed a draw of 15.4M barrels of oil in U.S. commercial stockpiles for the week ending July 28.

Last month, the U.S. Senate voted to block China from buying oil from the SPR, which now stands at an ~40-year-low .

More on crude oil market

• Global Energy Fundamentals: Finding A Floor, Outlook
• Saudi Voluntary Cut Should Last Into Year-End
• Crude Oil Likely Heading Further Higher

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