Oil prices rise due to US plans to replenish strategic reserves

Oil prices for benchmark grades surged on October 29 as investors assessed news regarding the replenishment of strategic reserves in the US.

The price of December futures for Brent crude on the London ICE Futures exchange is currently $72.20 per barrel, reflecting an increase of $0.78 (1.09 per cent) from the previous trading, Caliber.Az reports.

December futures for WTI crude oil on the e-trading platform of the New York Mercantile Exchange (NYMEX) have risen by $0.73 (1.08 per cent) to reach $68.11 per barrel.

The Biden administration is seizing the opportunity presented by falling oil prices to revive its efforts to replenish the depleted emergency oil reserves.

The Energy Department revealed plans to acquire up to 3.3 million barrels of crude oil in October for the Strategic Petroleum Reserve. This comes after rising oil prices caused the agency to cancel a similar initiative last month, citing that it was not in the best interest of taxpayers.

The Energy Department has been gradually restocking its Strategic Petroleum Reserve, which once held over 700 million barrels but dropped to a 40-year low due to the administration's historic drawdown of 180 million barrels following Russia's invasion of Ukraine. As of now, the reserve contains approximately 367 million barrels, down from nearly 600 million barrels at the beginning of 2022.

Recent factors, including indications of a well-supplied oil market and the potential for OPEC+ to boost production, have contributed to a decline in oil prices, with prices trading around $78 a barrel - below the administration's target buying range of $79 a barrel and lower.

“We are buying back and we want to buy at a rate that is good for the taxpayer,” Energy Secretary Jennifer Granholm stated during a congressional hearing when asked about the plan to refill the reserve.

Since last year, the administration has acquired 32.3 million barrels of oil at an average price of $76.98, according to Energy Department data.

By Naila Huseynova