Oil: SPR refill noise - ING

Oil prices edged higher yesterday, with ICE Brent settling 0.31% higher on the day. The gains were driven by a recovery in equity markets and a relatively supportive inventory report from the Energy Information Administration (EIA), ING's commodity analysts Warren Patterson and Ewa Manthey note.

Crude oil prices may provide an opportunity to refill the SPR

"The EIA said US crude oil inventories increased by 1.75m barrels over the last week, much less than the 4.59m barrel increase the American Petroleum Institute (API) reported the previous day. Meanwhile, Cushing crude oil inventories fell by 1m barrels, while for refined products, gasoline and distillate stocks fell by 527k barrels and 2.81m barrels, respectively. US gasoline inventories have fallen for three consecutive weeks. They're now the lowest since early January."

"Another supportive factor: the US energy secretary saying current crude oil prices may provide an attractive opportunity to buy oil to refill the Strategic Petroleum Reserve (SPR). The SPR stands at a little under 396m barrels. That's up from a low of 347m barrels in 2023, but still well below the 621m barrels it stood at in mid-2021."

"Energy Secretary Chris Wright previously said it will take years to fully refill the SPR, requiring $20bn of funding. Considering the SPR has a capacity of around 700m barrels, this assumes refilling the SPR would cost around $65/bbl."