US Crude Oil Prices Up 24%, Reversing Wednesday Loss as Trump Moves to Top Up Reserves

NEW YORK (Pakistan Point News / Sputnik - 20th March, 2020) US crude prices settled up 24 percent on Thursday, reversing the previous day's losses, after the Trump administration moved to buy oil of American-origin to fill the nation's strategic reserve and support an industry hit by demand lost to the novel coronavirus crisis and unexpected output hikes by Saudi Arabia.

West Texas Intermediate (WTI), the New York-traded benchmark for US crude prices, settled up $5.08, or 24.4 percent, at $25.91 per barrel. On Wednesday, WTI settled down 24 percent at $20.38, its lowest in 18 years.

Brent, the London-traded global benchmark for crude, settled up $3.59, or 14 percent, at $28.47 per barrel.

Earlier on Thursday, Energy Secretary Dan Brouillette told reporters that the Trump administration has asked Congress for $3 billion to buy 77 million barrels to top up the Strategic Petroleum Reserve.

The Strategic Petroleum Reserve, which holds the nation's oil reserves in underground salt caverns in Louisiana, has a total capacity of 713.5 million barrels. As of March 15, total volume of crude in its hold was at 649.

1 million barrels, according to the Energy Information Administration.

The US Energy Department said earlier on Thursday that it will initially purchase up to 30 million barrels of sweet and sour crude oil with a focus on small to midsize US oil producers.

Brouillette told reporters that he expected the second batch of purchases to be made between 60 and 90 days.

Brouillette also said the Energy Department was taking advantage of the current low crude prices to fill up the SPR and also aid US oil producers facing potentially catastrophic losses from the impacts of coronavirus and the intentional disruption to world oil markets by foreign actors.

Despite Thursday's rebound, WTI and Brent both remain down about 60% on the year.

Aside from demand lost to the coronavirus pandemic, the US oil industry is also hurting from massive production hikes by Saudi Arabia, which is also offering its crude at much lower prices to poach market share from Russian and American crude exporters.