Oil prices have sputtered since the U.S. began selling its stockpiles By David Uberti Dec. 31, 2023 5:30 am ET 992 President Biden’s emergency oil sales turned the White House into an active player in crude markets. Head of state. Commander in chief. Oil-trading whale? President Biden’s unprecedented release of oil from America’s petroleum reserves in 2022 turned the White House into an unusually active player in the volatile crude market. The flood of emergency supplies helped arrest surging oil prices after Russia invaded Ukraine, and pulled billions of dollars into the Energy Department’s coffers in the process. Oil prices have sputtered since and allowed officials who sold high to start replenishing U.S. stockpiles on the cheap. The question that will echo from Washington to Wall Street in 2024 is how the Biden administration might finish off a trade many investors would envy. The Energy Department says it has already snapped up about 13.8 million barrels of crude, with accelerating deals in recent weeks signaling the agency could move more aggressively next year. At an average price of $75.63 a barrel, the purchases so far total a nearly $270 million theoretical discount from last year’s average sale price of $95 a barrel. The Energy Department will have about $3.45 billion left to buy more oil after those deliveries are complete, a spokeswoman said. That is enough cash for tens of millions more barrels of crude. The Biden administration’s opportunity to build on its gains could slip away if prices rise. Benchmark U.S. crude changed hands Friday at $71.65 a barrel, well below the administration’s asking price of $79 or lower, even as fallout from the Israel-Hamas war threatens tankers in one of the world’s most important shipping lanes. Any major ramp-up in deals would come with challenges. It could strain the country’s ability to release emergency supplies, since storage sites can’t accept crude at the same time. The facilities, some of which are currently undergoing maintenance, are also limited in how much they can receive each month. But some traders and analysts say locking in future purchases at today’s prices could help turn U.S. stockpiles into a force for market stability and expand America’s clout as an energy superpower. “Even if it’s at a small size, being able to exert that muscle could be very valuable,” said Skanda Amarnath, executive director of the macroeconomic policy think tank Employ America. The U.S. and other countries began amassing stockpiles in the 1970s, aiming to hold 90 days’ worth of net imports, after the Arab oil embargo sent prices skyrocketing in an inflationary shock to the American economy. The Strategic Petroleum Reserve peaked in size in 2010 near 727 million barrels, according to the Energy Information Administration. Since then, booming shale output helped the U.S. become the world’s largest oil producer, and officials from both parties pushed to sell off some of the stockpiles to fund other projects. Biden’s release after Russia’s invasion of Ukraine was the largest ever. Emergency sales of roughly 180 million barrels helped shrink the reserves to as little as 347 million barrels, a 40-year low. The skyscraper-sized storage caverns in Texas and Louisiana now hold the equivalent of nearly 175 days’ worth of net imports, according to federal record-keepers. Canadian crude has also come to account for far more of the country’s imports, while supplies from the Saudi-led Organization of the Petroleum Exporting Countries and its Russia-led allies have plummeted. Still, administration officials say they want to refill at least some of the reserves when the price is right. The strategy has three prongs. The Energy Department has recovered some supplies from crude lent to refiners and returned with a premium this year. Congress also canceled previously scheduled sales totaling about 140 million barrels in exchange for $12.5 billion from the Energy Department’s account, according to the Dallas Fed. Big purchases on the open market, relatively rare in recent decades, have proven to be the most difficult piece of the puzzle. The Energy Department’s first attempt at buying oil this year failed. The agency later bumped up its target price from $72 a barrel and revamped its approach to contracts to limit suppliers’ risk while officials evaluated proposals. SHARE YOUR THOUGHTS How should President Biden manage the U.S. Strategic Petroleum Reserve? Join the conversation below. The agency’s most recent contract, awarded Dec. 26, scheduled deliveries for March. Officials plan to “purchase as many barrels as possible, while getting the best deal for taxpayers,” a spokeswoman said. Additional monthly solicitations are expected at least through May. The extension suggests the government is growing more comfortable with deals that have longer time horizons, said Ilia Bouchouev, managing partner of Pentathlon Investments. If the U.S. is willing to expand that approach, Bouchouev said it could lock in cheaper contracts for deliveries in late 2024 and 2025 and avoid the risk that prices will rise. “Buy it back at $75 [a barrel], claim victory for the taxpayers and call it done,” he said. https://www.wsj.com/business/energy...ader-extraordinaire-e97947fb?mod=hp_lead_pos3 Better graphics in the link