Biden Halts Attempts To Refill SPR As Oil Price Soars

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by Tyler Durden
Wednesday, Apr 03, 2024 - 07:05 PM

More than a year ago, we laughed at the thought that the Biden admin would actually follow through with its promise to refill the Strategic Petroleum Reserve when oil fell below $80, which in turn prompted area idiots to really rub it in our face when WTI tumbled as low as $73.

In retrospect we were, of course, right (and area idiots will continue failing upward until finally someone gives them the old rugpull) because even though WTI did indeed spend a few months below $80 before exploding back up again, this is how much oil the Biden admin purchased to refill the SPR after it intentionally drained it in 2022 to limit the surge in gas prices. Can't see it? It's highlighted in the yellow circle (yeah, no wonder you can't see it).

And now that WTI is back to $86 and the Biden admin has completely missed its window to add some more oil to the SPR besides the token several hundred barrels here and there, the Biden administration has capitulated and today announced it won’t move forward with its latest plans to buy oil for the Strategic Petroleum Reserve amid rising prices.

According to Bloomberg, Biden's Energy Department said it was “keeping the taxpayer’s interest at the forefront” in its decision not to purchase as many as 3 million barrels of oil for a Strategic Petroleum Reserve site in Louisiana. The plan for the barrels to be delivered in August and September had been announced in mid-March. It has now been canceled meaning that the already dismal rate of SPR refill will now flatline for the foreseeable future, at least until the NBER admits the US is in a recession.

“We will not award the current solicitations for the Bayou Choctaw SPR site and will solicit available capacity as market conditions allow,” the department said. “We will continue to monitor market dynamics.”

The capitulation follows a surge in crude prices, with WTI on Tuesday rising above $86 a barrel for the first time since October. The Biden administration has a target to buy oil at $79 or lower to refill the reserve, though spent an average of about $81 a barrel in its latest purchase of 2.8 million barrels late last month.

The Energy Department has been slowly refilling the emergency oil supply after it reached a 40-year-low following the administration’s unprecedented drawdown of a record 180 million barrels in the wake of Russia’s invasion of Ukraine. It currently holds about 363 million barrels, according to Energy Department data, down from almost 600 million at the start of 2022.

And just like that anyone hoping that Biden would add more than a few drops to the SPR can stop holding their breath: “Domestic crude prices are likely to remain too high for the remainder of the year for DOE to resume its refilling program,” said Bob McNally, president of consultant Rapidan Energy Group and a former adviser to President George W. Bush.

“If pump prices keep rising, the Biden administration will shift gears and reconsider SPR releases, though we current do not think they are imminent.”

Of course, Wall Street which is always wrong about everything, urged its clients to sell oil at the lows and turned bullish, well, now.

Ironically, Biden's White House handlers didn't listen to either the right, or the wrong call. And now they have $100 oil to deal with and the elections are 7 months away: good luck explaining the coming decision to drain another 60 million barrels in SPR oil in the next few weeks as a "national emergency" although we are certain they will try.