The Energy Department is testing its Strategic Petroleum Reserve (SPR) in light of the impact the shale boom has had on U.S. petroleum infrastructure. The situation in Ukraine is not mentioned in the DoE’s statement.
The test will include the “drawdown and sale of up to 5 million barrels of sour crude oil,” said DoE spokesman Bill Gibbons.
Drawdowns on the SPR are pretty irregular. Here’s a list from the DoE:
- 2011 IEA Coordinated Release (Libya) – 30,640,000 barrels
- 2005 Hurricane Katrina Sale – 11 million barrels
- 1996-97 total non-emergency sales – 28 million barrels
- 1990/91 Desert Storm Sale – 21 million barrels (4 million in August 1990 test sale; 17 million in January 1991 Presidentially-ordered drawdown)
- 1985 – Test Sale – 1.0 million barrels
Oil is off more than 1.5% today.
Earlier today, the EIA said weekly inventories were up 6.2 million barrels, far greater than the 2 million seen in a Tuesday survey conducted by Platts.
Oil has already had a rough week, down 3.5% on expectations of rising U.S. supplies amid reduced demand as refineries undergo seasonal maintenance. It closed at its lowest level in a month yesterday.
And here’s the full release from the Energy Department about the SPR test:
“By law, the Department of Energy is required to conduct continual evaluation of the Strategic Petroleum Reserve system’s drawdown and sales procedures. Due to the recent dramatic increase in domestic crude oil production, significant changes in the system have occurred – including pipeline expansion, construction of new infrastructure, reversed flow of existing pipelines and increased use of domestic crude oil terminals. In order to appropriately assess the system’s capabilities in the event of a disruption, today the Department of Energy authorised a test drawdown and sale of up to 5 million barrels of sour crude oil.” — DOE spokesman, Bill Gibbons