U.S. to buy 3M crude oil barrels for Strategic Petroleum Reserve (NYSEARCA:USO)
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The U.S. Department of Energy said Monday it plans to buy as much as 3M barrels of crude oil for the Strategic Petroleum Reserve to begin refilling the emergency reserve that has fallen to its lowest level since 1983.
Crude oil prices extended gains in post-settlement trading on news of the plan, with June WTI futures (CL1:COM) jumping to $71.48/bbl before pulling back, after closing +1.5% at $71.11/bbl, snapping a three-session losing streak.
The new purchase would be for sour crude oil, delivered to the Big Hill SPR site in Texas sometime in August.
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For the week ending May 5, the SPR inventory totaled 362M barrels, down 2.9M barrels for the week, according to the Energy Information Administration, and leaving the level slightly over half the 713M-barrel capacity.
Analysts said the potential for an SPR repurchase and the continued shutdown of a key Middle East oil pipeline helped lift crude prices Monday.
The 450K bbl/day Iraq-Turkey oil pipeline – also known as the Kirkuk-Ceyhan pipeline – which has been shut since late March, remains shut despite Iraq’s request to restart it last week, and its status is further complicated by Turkey’s apparent presidential election runoff.
Crude oil fell last week for the fourth consecutive week, a slump that saw WTI crude shed 15%.
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