(New York) Oil prices ended a streak of three consecutive positive sessions on Thursday, undermined by statements by the US Minister of Energy, who postponed until next year, at least, the purchases of crude oil to replenish US strategic reserves.
The price of a barrel of Brent from the North Sea for delivery in May fell 1.01%, to close at 75.91 dollars.
As for the American West Texas Intermediate (WTI), also with maturity in May, it fell 1.32% to 69.96 dollars.
Prices had started the session in the green, still supported by the technical momentum generated since Monday.
But the market turned “because Secretary of Energy (Jennifer) Granholm indicated that SPR (strategic reserve) purchases were unlikely to be made this year,” said Phil Flynn, Price Futures. Group.
Between September 2021 and January 2023, the US government withdrew some 250 million barrels from strategic reserves (SPR), or 40% of the total, in an attempt to relieve the price of black gold.
SPRs are currently at their lowest level since December 1983.
After officially interrupting its program to draw down strategic reserves in December, the government of President Joe Biden pledged to replenish them.
A first call for tenders was launched, but it did not succeed.
“It will be difficult to take advantage of the (current) low prices this year” and buy oil on the market, Jennifer Granholm said Thursday during a hearing before the House Budget Committee.
The Minister explained that the difficulties were notably linked to maintenance work affecting two of the four strategic reserve storage sites.
SPRs are stored in huge salt caverns in Texas and Louisiana.
Another problem is that the US Department of Energy is required by an old law passed in Congress in 2015 to put an additional 26 million barrels from strategic reserves up for sale between April and June.
These statements have “prompted some to take profits because operators thought that the government was going to start buying oil if prices fell below 70 dollars”, which is currently the case, observed Phil Flynn.
President Joe Biden had pledged in October that the United States would acquire crude on the market if prices fell into a range between $67 and $72.
Despite the postponement, Mme Granholm said the government still plans to replenish strategic reserves. But “it will take a few years, because filling takes longer than pumping,” she said.