Oil: Washington will draw an additional 15 million barrels from its reserves
The news of this additional use, reported by several American media on Tuesday during the day, was enough to send crude prices down earlier on Tuesday.
The United States will draw an additional 15 million barrels from its strategic reserves to try to relieve oil prices, and President Joe Biden does not rule out using more, indicated a government official on Tuesday.
This new puncture, which will be carried out in December, constitutes the last part of the program announced in the spring by the American head of state and which provided for the release of 180 million barrels in total to cope with the soaring prices linked to the oil. #x27;invasion of Ukraine.
The President has instructed the Department of Energy to stand ready to sell more [oil from reserves] this winter if necessary, whether due to Russia or the United States. #x27;other actions that would disrupt the market, the official told reporters.
The news of this additional use, reported by several American media on Tuesday during the day, was enough to drop crude prices earlier on Tuesday.
The price of a barrel of West Texas Intermediate (WTI), the American reference variety, for delivery in November, had thus fallen by 3.08%, to end at 82.82 dollars .
Already largely digested, the official announcement did not react to prices in electronic trading on the CME Stock Exchange. In the evening, WTI thus took more than 1%, while injecting millions of additional barrels into the market is theoretically more likely to lower prices.
Asked about the possibility of limiting or suspending oil exports, the government official explained that the Biden government was keeping all the tools on the table, anything that could help ensure the supply of the American market.
At the same time, the American president plans to put in place a mechanism to replenish the strategic reserves in the long term. The U.S. government will start buying back crude when the price of WTI drops to a range between $67 and $72.
The administration plans to negotiate repurchase contracts at a price agreed in advance, through an auction process, which will limit the risks associated with price volatility, according to the official.
Since the beginning of September 2021, the United States has extracted more than 212 million barrels from strategic reserves, which are the lowest since June 1984. Never has a president released such quantities since the creation of these reserves, in 1975.
The president also calls on oil companies to immediately pass on lower energy prices to customers, according to the official. Maintaining high prices when costs are falling is unacceptable, he insisted.
As the November 8 legislative election approaches, Joe Biden wants to avoid a rise in the price of gasoline, a strong marker for American motorists.
While down 22% from its peak in mid-June, the price of regular gasoline remains 16% above its level in the x27;last year at the same time.
As for diesel, it has only fallen back moderately since June, due to very low stocks, and costs 50% more on average than there one year old.