As US Wraps Up Planned SPR Releases, About 40 Million Bbl Yet to Be Committed
The U.S. released only 400,000 bbls from the Strategic Petroleum Reserve last week.
The small release comes as only 3 million bbls remain of oil currently contracted for release from the reserve.
But a June solicitation for 40 million bbls resulted in contracts for only 500,000 bbls being awarded.
The United States released 400,000 bbl of oil from the Strategic Petroleum Reserve last week, the smallest weekly release since the Trump administration began tapping the stockpile in March, according to data Monday issued Monday by the Department of Energy.
As of Friday there were 285 million bbl held in the reserve, with inventories at levels last seen in November 1982.
Inventories are now 130.4 million bbl lower than the 415.442 million bbl the reserve held before the latest release program began more than five months ago.
The week’s release is the smallest of those seen in each of the last 25 weeks and follows a 1.2 million bbl release the previous week.
The small size of the latest releases come as the U.S. is close to wrapping up delivery of crude from the stockpile awarded in recent solicitations. But those awards total nearly 40 million bbl less than the amount the Trump administration has said it would release from the reserve to offset supply disruptions caused by the war in Iran. With fighting heating up and crude prices rising again, it remains to be seen if the administration will issue a new solicitation for the remaining oil targeted for release.
The latest release was made up entirely of sour crude, leaving the stockpile now holding 188.1 million bbl of sour crude and 96.8 million bbl of sweet crude.
Although the Trump administration has pledged to release a total of 172 million bbl from the reserve, it has so far only awarded contracts for the release of 133.5 million bbl.
Under the awards, stockpiles in the reserve should fall by an additional 3 million bbl or so in coming weeks.
Releases from the reserve are being conducted under a return-exchange program, with companies that are awarded barrels agreeing to return them, along with additional oil as a premium for the loan.
The U.S. releases are part of a coordinated effort by International Energy Agency member nations to release a total of 400 million bbl from national stockpiles to deal with supply disruptions caused by Iran’s closure of the Strait of Hormuz.
Those release have been credited with helping stave off the supply shock predicted at the start of the war.
The recent flare-up of fighting in the region has led to a series of rapid increases in the price of oil over the last two weeks, with U.S. benchmark West Texas Intermediate crude trading at more than $100/bbl on Monday.
The last solicitation for oil from the reserve was released in June and sought bids for up to 40 million bbl of crude from the stockpile. But only 500,000 bbl were awarded from that solicitation, as U.S. crude oil futures prices had fallen to about $80/bbl by the time bids were due.
In an analysis Monday, Aaron Kildow, an analyst with Sparta Commodities, said the renewed fighting in the region has slowed exports from the Arabian Gulf area and returned markets “back to April- or May-type conditions” in regards to supply.
“The biggest differentiator, however, is there is no SPR cavalry on the horizon, and it is unclear how global medium grades will balance out in the near term if AG grades are either unavailable or too expensive,” he wrote.
The Department of Energy on Monday did not respond to questions about the possibility of a new solicitation in the near future.
Reporting by Steve Cronin, steven.cronin@dowjones.com; Editing by Dean Visser, dean.visser@dowjones.com