Two upcoming sales of crude from the US Strategic Petroleum Reserve (SPR) likely will "more than offset" a recent decision by Opec+ to lower production targets next month, a top White House official said.
The US already has sold 155mn bl of crude from the SPR, out of 180mn bl that President Joe Biden ordered withdrawn from the reserve as a "wartime bridge" to ease energy disruptions caused by Russia's invasion of Ukraine. Although those sales are mostly finished, two remaining sales will put downward pressure on prices, White House chief of staff Ron Klain said in an interview on the Fast Politics podcast released today.
"Most of that is finished, but there's still two significant sales left," Klain said. "That helps bring down the price by putting more oil on the market."
The US last week offered to sell another 10mn bl of sweet crude from the SPR for delivery in November. That will leave 15mn bl available to sell under the 180mn bl authorization.
The Opec+ coalition earlier this month agreed to cut its October crude production target by 100,000 b/d. The upcoming SPR sale would reduce the price effects of a "very small production cut," Klain said.
"We think that the next sale we do from the Strategic Petroleum Reserve more than offsets that," Klain said. "I think barring some kind of event that disrupts the supply - like a hurricane in the Gulf, or something like that - we think we're on track for continued declines on the price of gas."
US gasoline prices have declined over the last 15 weeks, dropping to an average of $3.65/USG for regular grade in the week ended on 19 September from a record high of $5/USG in mid-June, according to data from the US Energy Information Administration.
Democrats are considering changes to how the US manages its strategic reserves, featuring 422.6mn bl of crude in the SPR and 2mn bl of diesel and gasoline in a US northeast products reserve.
US House Energy and Commerce Committee chairman Frank Pallone (D-New Jersey) has crafted a bill that would create strategic reserves of diesel and gasoline in each region of the US that could be deployed immediately during emergencies. It would also create a new 350mn bl subset of the SPR with the goal of moderating prices, by giving the US the ability to buy oil when prices are less than $60/bl and sell when prices exceed $90/bl.
