The Department of Energy (DOE) has purchased 3 MMBbl of U.S-produced sour crude oil for November delivery into its Strategic Petroleum Reserve in Big Hill, Texas at an average of $77.69/bbl. That's well below the roughly $95/bbl that SPR crude was sold for in 2022.
A total of 7 companies responded to the buy-tender that was issued May 17 for oil with gravity 28.5-35 API and sulfur content 0.51-2.5% (mass). Awards went to BP Products North America (600 MBbl), Macquarie Commodities Trading (1.5 MMBbl) and Atlantic Trading & Marketing (900 MBbl).
This is part of a buyback plan to refill the SPR which was drawn down massively two years ago as the government sought to address significant global supply disruptions while keeping domestic fuel prices in check after Russia invaded Ukraine. The emergency reserve release which was announced in March 2022 was for 1 MMb/d over six months. Some traders see these routine purchases as providing a floor for oil prices, and therefore an incentive for the U.S. driller to keep producing.
