Oil prices on Friday traded narrowly higher on the week, with West Texas Intermediate crude bobbing above $81 a barrel. Strength in the dollar helped tame upward pressure on oil, following continued signs of recovery in China and data showing slowed exports from Saudi Arabia and Iraq.
(Video link discusses impact of Fed rate decisions on the dollar.)
The Department of Energy is also exerting some demand for oil. U.S. Energy Secretary Jennifer Granholm on Monday told the CERA Week energy conference in Houston that the U.S. would replenish the Strategic Petroleum Reserve to pre-March 2022 levels by the end of this year.
Current Energy Information Administration data show SPR levels being replenished gradually, up a bit more than 10 million barrels since early December. The Biden Administration had earmarked 180 million barrels for sale, beginning in March 2022, shortly after the Feb. 24 start to Russia's assault of Ukraine.
In July that year, the administration announced it would sell another 20 million barrels.
Following the March 2022 announcement, the reserve levels dropped from 580 million barrels at the end of February 2022, leveling out at around 371.5 million barrels in January 2023. The SPR hit a low below 347 million barrels in July.
From February top to July bottom, the Strategic Petroleum Reserve decreased by a total of 233 million barrels, according to Energy Information Administration data.
Oil Prices: DOE Sells High, Buys Low
The Trump administration left the SPR with about 635 million barrels when it exited office in January 2020. Four years earlier, the Obama administration had delivered an SPR with more than 695 million barrels.
For the week ended March 15, the EIA reports the SPR level at 362.3 million barrels.
The DOE's October release said Treasury Department analysis showed the 2022 releases trimmed as much as 40 cents a gallon from the retail price of gasoline.
During the period of the Biden administration SPR sales, the price of West Texas Intermediate crude hit $115 a barrel in March 2022, sunk below $93 a barrel in April, then rebounded to above $118 in June.
Through mid-October, the administration reported replacing 4.8 million barrels at prices below $73 a barrel. In mid-October, the DOE raised its price threshold to $79 a barrel.
Retail prices during the restocking of 10.3 million barrels since December, were between $68.85 and $80.72 a barrel.
Granholm's LNG Comments
The Strategic Petroleum Reserve is a string of 60 salt caverns in four locations in East Texas and Louisiana. The barrel-shape caverns are around 200 feet across and as much as 2,500 feet deep. Fashioned into an oil storage facility in the 1970s, the sites are undergoing significant updating and overhaul.
That work has taken longer than expected, and has limited the rate at which oil can be reinjected into the caverns.
In addition to SPR news, Granholm also ruled out estimates for a 10 to 14 month delay in permits for additional new LNG export capacity. She reiterated that the delay on the most recent applications for capacity increases were temporary and for study purposes only.
Oil prices held largely flat for the week, with West Texas Intermediate crude trading just above $81 a barrel on Friday. WTI settled at $81.04 a week earlier. Oil prices have made little progress since breaking past resistance around $80 a barrel on March 1.
