Washington — The Trump administration's plan to fill the US Strategic Petroleum Reserve with 77 million barrels of medium and heavy crudes appears to be on hold after Congressional leaders removed funding for it from a contentious coronavirus aid package.
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The $3 billion requested by the Trump administration to buy US-origin crudes could still be added to future coronavirus stimulus legislation.
A spokesman for Senator Chuck Schumer, Democrat-New York, confirmed early Wednesday that the final deal reached overnight removed the SPR funding.
The government stockpiles represent the equivalent of about 8% of currently available commercial crude storage, according to Bob McNally, president of Rapidan Energy Group. The consultancy expects crude and product storage to be full by the end of summer, if not earlier.
McNally predicted a deal without the SPR funding could initially push oil futures down another $1/b.
"But there could be a bigger, psychological, bearish impact as failure to fill the SPR would signal Washington's complete inability to execute no-brainer policy steps in the midst of a full-blown crisis and call into question the federal government's broader competence and coherence," he said Tuesday while Republicans and Democrats were still negotiating a final deal.
The Department of Energy took the first step Thursday in seeking 77 million barrels of medium and heavy sour crudes to fill the SPR while prices are low, but it cannot move forward without Congressional funding. Energy Secretary Dan Brouillette said the administration asked Congress for $3 billion to account for potentially higher crude prices in the coming months.
Brouillette said in an interview Thursday that he had no doubt Congress would approve the funding.
"We've gotten broad support across the Congress, both sides of the aisle," he told Platts Capitol Crude. "I've not received any calls that would lead me to believe that there's concern on the Hill about doing something like this.
"I think the reason we see that is because it's a very common-sense move for the US government to take at this point with oil prices at historic lows, it's the perfect time to fill the Strategic Petroleum Reserve."