Some 10 million barrels of crude from the U.S.’s strategic reserve are scheduled to be sold later this month, the Department of Energy said. The shipment is part of a total 25 million barrels, to be sold over a period of three years, as per the 21st Century Cures Act, signed in December last year.
Sales from the SPR are conducted, according to the DoE, to “respond to a severe energy supply interruption, to prevent or address lesser supply shortages or to conduct evaluations of drawdown and sales procedures.” The Department added that the bidding is open to all companies registered in the Crude Oil Sales Offer program and the registration procedure is also open to new entrants.
UPI notes that the 10 million barrels to be shipped this month represent less than 2 percent of the strategic reserve’s current capacity, which is calculated at 695.1 million barrels. As such, the sale is unlikely to have a lasting impact on crude oil prices, although a brief fluctuation is likely.
The announcement comes on the same day that the EIA reported a massive build in commercial oil stockpiles, at 13.8 million barrels, in tune with, though lower, than API’s Tuesday estimate of a build of 14.23 million barrels. Related: Oil Prices Plunge And Bounce Back After EIA Reports Massive Crude Build
As shale producers continue ramping up production, encouraged by the higher prices, investor attention seems to be more focused than ever on data coming from the U.S., hence the likelihood of the SPR sale affecting prices.
OPEC is also watching news coming from across the Atlantic: after API’s report, OPEC officials, including Iran’s and Qatar’s Oil Ministers, were quick to tell media that the production cut agreement is going well and that there is a possibility that it will need to be extended beyond the June deadline to ensure a market rebalancing.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- Are These OPEC Members Sabotaging The Output Deal?
- Permian Drilling Costs Surge: Are The Days Of Cheap Oilfield Services Over?
- Time Bomb In Oil Markets: Goldman Sachs Issues Warning
