U.S. Scores $4 Billion Windfall on Oil-Reserve Sales
Washington emerges as unlikely winner after releases from Strategic Petroleum Reserve
The Energy Department sold the crude to U.S. refiners, foreign trading houses and major oil producers.Photo: Johannes Eisele/Agence France-Presse/Getty Images
By David Uberti
Dec. 19, 2022 5:30 am ET
https://www.wsj.com/articles/u-s-scores-...les-11671420244


Volatile energy markets have made 2022 a big year for commodity traders. One of the biggest and perhaps most unlikely winners: The U.S. government. 

Emergency releases from the U.S. Strategic Petroleum Reserve are slated to end this month, concluding an unusual attempt to lower gas prices after Russia’s invasion of Ukraine sent oil prices soaring. 

Over the release period, Washington sold 180 million barrels of crude at an average of $96.25 apiece, well above the recent market price of $74.29—meaning the U.S., for now, is almost $4 billion ahead.

The price of West Texas Intermediate to be delivered next month is down 40% from its wartime peak, reflecting concerns that China’s pandemic reopening isn’t juicing global demand. 

The question is whether the good news will last.

Some market participants criticized the Biden administration’s March decision to authorize the releases, calling it an unprecedented intervention into the market. Now, as the differential between the prices of SPR sale and crude futures widens, some analysts and investors have called on the administration to begin replenishing its stockpiles. 

The Energy Department, empowered by October rule changes that give it more flexibility in such purchases, is able to wait for favorable prices as it begins to refill more of the SPR’s skyscraper-sized underground storage caverns, a senior administration official said, adding that the process will likely take months and years. On Friday, the department solicited bids for 3 million barrels from a U.S. supplier starting in February.

“At some point, they will need to start buying irrespective of the market,” said Claudio Galimberti, senior vice president of analysis at the consulting firm Rystad Energy. “You cannot expect the U.S. government to behave like a trader.” 

But the administration appears to be in no rush. It has said it believes the SPR’s remaining holdings—about 382 million barrels—leave it well-positioned to weather potential supply shocks. The SPR held about 593 million barrels of oil at the beginning of this year, according to the Energy Department, down from a peak of 727 million barrels in 2009. 

Since then, the U.S. has emerged as a major oil exporter. 

“There is no need to refill it to previous levels due to the shale revolution,” said Anas Alhajji, a managing partner at Energy Outlook Advisers.-- excerpt, rest at link above --

I guess it will make a tiny dent in what we're sending through Ukraine.