The Department of Energy (DoE) had confirmed the purchase of three million barrels for the so-called Strategic Petroleum Reserve, or SPR, and announced solicitation for another three million barrels in a news release issued Friday.
Citing two people with knowledge of the matter, US media reported Tuesday that the government will now be sourcing six million barrels more for the rest of the year.
The DoE will “seek opportunities for additional repurchases as market conditions and the constraints of SPR operations allow,” media quoted a spokesperson of the department as saying. It added that the White House did not immediately comment on the matter.
In Friday’s news release, the DoE said the three million barrels it bought were purchased at an average of about $73 per barrel, lower than the $95 average that crude from the SPR was sold at in 2022, describing it as a “good deal for taxpayers.”
In Tuesday’s trading, West Texas Intermediate, the benchmark for US crude, settled at just under $70 a barrel for the front-month contract on the New York Mercantile Exchange.
What the DoE was buying back for the SPR in the name of reserve rebuilding is “a tiny amount compared to … the barrels that have been sold,” said Adam Button, a markets commentator on the ForexLive platform.
The administration’s use of the SPR has been a highly-charged matter for oil bulls and opponents of President Joe Biden. Both sides accuse him of indiscriminately releasing hundreds of millions of barrels from the stockpile to subdue crude prices and shore up his political standing with American voters — when the reserve is meant for emergency use, in times of critically short oil supply.
Biden, in his defense, said he was acting to reduce record high pump prices of fuel, which stood at above $5 per gallon last June and now hovers at around $3.50. The administration also blames last year’s high crude prices for US inflation getting to four-decade highs of above 9% in June.
The DoE reiterated on Friday it has canceled 140 million barrels in congressionally mandated sales from the SPR scheduled for fiscal years 2024 through 2027.