US SPR refill continues with DOE purchase of 2.95 million barrels of crude for June delivery

The US Department of Energy has purchased a total of 2.95 million barrels of crude from four companies to replenish the Strategic Petroleum Reserve as part of a solicitation issued last month, the agency said Feb. 15.

The sour crude barrels acquired for June delivery cost, on average, $77.81/b, the DOE said, in line with a refill strategy that seeks to provide a return to taxpayers on the 180 million barrels of oil the department sold from the SPR in 2022 at an average price of $95/b to combat energy price hikes spurred by Russia's invasion of Ukraine. The total purchase price was $229.54 million.

The DOE has thus far managed to close contracts for 23.08 million barrels at an average price of $76.34/b.

The department has awarded a flurry of contracts in recent months. Whether it continues to grant new purchase contracts or efforts to replenish the emergency crude stockpile stall in the coming months will depend on where oil prices head as the DOE eyes purchases when oil is below $79/b.

Market watchers are paying close attention to Red Sea risks as rising geopolitical tensions have led to a strain in shipping that could trigger higher prices.

The NYMEX March WTI settled $1.39 higher Feb. 15 at $78.03/b, while the ICE April Brent climbed $1.26 to $82.86/b.

"DOE will continue to evaluate options to refill the SPR while securing a good deal for taxpayers, taking into account planned exchange returns and market developments," the department said in a news release.

The DOE said that eight companies submitted 32 proposals in response to its Jan. 31 solicitation.

The winning proposals came from Atlantic Trading & Marketing for 1.5 million barrels; Macquarie Commodities Trading US for 800,000 barrels; ExxonMobil for 350,000 barrels; and BP Products North America for 300,000 barrels.

Delivery of the oil is scheduled for June 1-30 to the Big Hill SPR storage site in Texas.

The DOE has an open solicitation, issued Feb. 8, for up to 3 million barrels for July delivery. Bids of at least 300,000-barrel minimum offer quantities are due by 11 am CT Feb. 21.

Crude volumes at the SPR stood at 358.8 million barrels the week ended Feb. 9, compared with the more than 600 million barrels seen prior to 2022, according to the Energy Information Administration.

The DOE has maintained that the SPR continues to be the world's largest supply of emergency crude supplies and even at current volumes can respond to energy security needs.