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US Aims to Buy Initial 30 Million Barrels of Oil for Emergency Stockpile

US Aims to Buy Initial 30 Million Barrels of Oil for Emergency Stockpile

Thursday, 19 March 2020 11:46 AM

The U.S. Department of Energy said on Thursday it will buy up to 30 million barrels of crude oil for the Strategic Petroleum Reserve by the end of June as a first step in fulfilling President Donald Trump's directive to fill the emergency stockpile to help domestic crude producers.

The reserve, in caverns on the Texas and Louisiana coasts, has 77 million barrels of available capacity. The first 30 million barrel purchase will be for both sweet and sour crude oil and is focused on buying from small and midsize producers, the Energy Department said.

The department "appears to be setting up multiple pathways to fulfill President Donald Trump’s request to fill the SPR, contingent upon future funding," analysts at ClearView Energy Partners said in a note to clients. "We view today's action as a necessary step towards an SPR fill, but not sufficient in its own right."

U.S. oil prices rose about 12% on Thursday to nearly $23 a barrel after a three-day sell-off sparked by the spread of the coronavirus and a price war between Saudi Arabia and Russia drove them to their lowest in almost two decades.

The department will buy up to 11.3 million barrels of sweet crude and up to 18.7 million barrels of sour crude. The delivery date is from May 1 to June 30 and proposals are due by March 26, it said.

Some of the funding for a full 77 million barrel purchase would first have to be mandated by new legislation. The Energy Department said it is working with Congress to finalize the funding to support the full purchase, which could run about $2 billion or more, depending on prices.

The Energy Department said the reserve can receive up to 685,000 barrels per day of crude. “The SPR will help relieve oil-related disruptions to our economy,” said Steven Winberg, assistant secretary for fossil energy at the department. 

© 2020 Thomson/Reuters. All rights reserved.

   
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The U.S. Department of Energy said on Thursday it will buy up to 30 million barrels of crude oil for the Strategic Petroleum Reserve by the end of June as a first step in fulfilling President Donald Trump's directive to fill the emergency stockpile to help domestic crude producers.
oil, crude, emergency, stockpile
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2020-46-19
Thursday, 19 March 2020 11:46 AM
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