UPDATE - US To Buy Up To 12Mln Barrels This Year To Rebuild Oil Reserve - Bloomberg

WASHINGTON (UrduPoint News / Sputnik - 14th June, 2023) The United States plans to buy about 12 million barrels this year to replenish its heavily-drawn oil reserve, with relatively low crude prices helping, Bloomberg reported on Tuesday, citing two people with knowledge of the matter.

The Department of Energy, or DoE, had confirmed the purchase of three million barrels for the so-called Strategic Petroleum Reserve, or SPR, and announced solicitation for another three million barrels in a news release issued Friday.

The Bloomberg report acknowledged that, suggesting the government will now be sourcing six million barrels more for the rest of the year.

The DoE will "seek opportunities for additional repurchases as market conditions and the constraints of SPR operations allow," the Bloomberg report quoted a spokesperson of the department as saying. It added that the White House did not� immediately comment on the matter.

In Friday's news release, the DoE said the three million barrels it bought were purchased at an average of about $73 per barrel, lower than the $95 average that crude from the SPR was sold at in 2022, describing it as a "good deal for taxpayers".

In Tuesday's trading, West Texas Intermediate, the benchmark for U.S. crude, settled at just under $70 a barrel for the front-month contract on the New York Mercantile Exchange.

The Biden administration has leaned heavily on the SPR since late 2021 to offset tight crude supplies that had raised fuel costs for Americans.

As of last week, the SPR's crude balance was at its lowest since November 1983 after the release of about 200 million barrels or more from the reserve over the past 18 months.

What the DoE was buying back for the SPR in the name of reserve rebuilding is "a tiny amount compared to ... the barrels that have been sold", said Adam Button, a markets commentator on the ForexLive platform.

The administration's use of the SPR has been a highly-charged matter for oil bulls and opponents of President Joe Biden. Both sides accuse him of indiscriminately releasing hundreds of millions of barrels from the stockpile to subdue crude prices and shore up his political standing with American voters � when the reserve is meant for emergency use, in times of critically short oil supply.

Biden, in his defense, said he was acting to reduce record high pump prices of fuel, which stood at above $5 per gallon last June and now hovers at around $3.50. The administration also blames last year's high crude prices for US inflation getting to four-decade highs of above 9% in June.

The DoE reiterated on Friday it has canceled 140 million barrels in congressionally mandated sales from the SPR scheduled for fiscal years 2024 through 2027.