DOE to Proceed with 18 Million Barrels Sale From SPR on Dec 17th

The US Department of Energy(DOE) announced last Friday, will sell 18 million barrels of oil from the Strategic Petroleum Reserve (SPR), as previously reported in a deal in November. 

The first exchange of 4.8 million barrels has already been approved to Exxonmobil, while others are encouraged to bid for additional barrels left. In November, the White House previously announced to release 50 million barrels from the SPR to combat global oil supply shortages. Among 50 million barrels, 18 million barrels will be an acceleration release in several months. This is what Congress had already approved in 2018 budget bills. 

Secretary Jennifer M. Granholm commented, 

“The President rightly believes Americans deserve relief now and has authorized the use of the SPR to respond to market imbalances and reduce costs for consumers.”   

Although previously, the White House has also indicated the time of release would depend on whether crude price continues to fall or not; recent inflation surging in November and elevated gas prices prompt it to continue acting according to the plan. Nevertheless, SPR has already fell to 600 million barrels last week, a 40 million drop since the beginning of the year.

National Gas prices across the US continue to remain well above $3/gallon. Even as crude prices fall to the levels in mid-2018, gas prices have only declined 8 cents. As of 12/12/21, The national average for a gallon of gas was $3.35. Roughly 40 cents are high than the peak of 2018 when crude prices averaged around $67 to $75 a barrel.

EIA inventory this week showed rising inventories for motor gasoline for the first time in almost 4 months. According to the weekly petroleum report, total motor gasoline inventories increased by 3.9 million barrels last week. At the same time, gasoline demand fell again in four-week averages. 

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