Oil futures: Crude surges aftermarket as Trump announces US to fill SPR

New York —

Oil futures surged in aftermarket trading after US President Donald Trump said the US government will take advantage of low oil prices and buy "large quantities" of crude to fill the Strategic Petroleum Reserve.

Front-month Brent and WTI, which had settled slightly higher on the day, climbed around 7% above their Friday settles in aftermarket trading after Trump announced that his administration would take advantage of low oil prices to fill the SPR.

"Based on the price of oil, I've also instructed the secretary of energy to purchase, at a very good price, large quantities of crude oil for storage in the US strategic reserve. We're gonna fill it right up to the top," Trump said at a White House press conference.

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Crude futures shot to session highs following the announcement, with front-month Brent hitting $35.95/b and prompt NYMEX WTI topping out at $33.86/b. Prices later pulled back from these highs and at 2100 GMT ICE May Brent was up $1.41 at $34.63/b and NYMEX April WTI was $1.43 higher at $32.93/b.

Still, markets were showing considerable risk to the downside remains.

Implied volatility, a measure of downside risk in the market, for front-month NYMEX WTI fell to around 94% Friday, from 100% on Thursday, according to data provider Marketview. Implied volatility reached 100% on Monday and Thursday, after having never reached this level since at least December 2007.

At the 1830 GMT close of regular market trading, NYMEX April WTI had settled up 23 cents at $31.73/b and ICE May Brent was up 63 cents at $33.85/b.

Oil futures had fallen more than 20% from last Friday after Saudi Arabia, OPEC's largest producer, started an unprecedented battle to squeeze Russia by slashing its crude selling prices over the weekend.

"We're buying at the right price. and that's something that would have not even been possible a week ago," Trump said. "The price of oil went down quite a bit, so we are gonna fill it up."

NYMEX April ULSD settled down 2.24 cents at $1.1374/gal and April RBOB was up 17 points at $89.92/gal at market close.

NYMEX CUSHING-HOUSTON SPREAD INVERTS

Sharply lower crude prices have pushed US refiners to ramp up purchases of Saudi Arabian crude, and import volumes are expected to average about 1.5 million b/d during the last week of March, up sharply from 435,000 b/d imported at the end of February and the beginning of March.

The benchmark WTI Cushing contract settled at a premium to the NYMEX WTI Houston contact Friday, eliminating the traditional discount for the first time since the Houston contract was launched in November 2018.