US buys just 126,000 barrels of crude in 1 million-barrel SPR test purchase

Washington — The US Department of Energy has bought 126,000 barrels of crude oil for the Strategic Petroleum Reserve from Shell Trading, a fraction of the 1 million barrel test purchase it had planned to make to gauge market conditions, DOE said June 10.

The DOE did not disclose any findings of the market test, the price paid, or whether it had plans to buy the remaining 874,000 barrels.

DOE issued a request for proposals May 10 seeking up to 1 million barrels of sweet crude to store in the government emergency oil stockpile located on the Gulf Coast.

In March, Democrats easily blocked the Trump administration's $3 billion request to buy US crude to fill the government's emergency oil stockpile.

ClearView Energy Partners said June 10 that House of Representatives Speaker Nancy Pelosi may be willing to make a deal for SPR funding, but "she still seems likely to ask for a higher price than oil-state lawmakers might be willing to pay."

Kevin Book, ClearView managing director, said Pelosi may have asked in the last round for $2 in green energy incentives for every $1 in SPR spending, or $6 billion in renewable/electric vehicle tax credits in exchange for DOE's requested $3 billion to buy crude to fill the SPR. "In our view, a White House that said no at $25/b seems unlikely to say yes at $40/b," Book said.

DOE shifted its focus in April to renting out space in the SPR caverns to private oil companies.

Nine companies -- Chevron, ExxonMobil, Energy Transfer, Vitol, Atlantic Trading, Alon USA, Equinor Marketing & Trading, Mercuria Energy America, and MVP Holdings -- negotiated to store a total 23 million barrels in the government stockpile located at four sites on the Gulf Coast.

SPR stocks have grown by 12.8 million barrels from April to 647.8 million barrels as of May 29, according to the latest Energy Information Administration data. With current authorized capacity of 714 million barrels, the stockpile has room for another 66.2 million barrels.

The renters will be able to receive their barrels back through March 2021, "minus a small amount of oil" to cover storage costs, the DOE said.