Trump Admin. Asks Congress For $3Bln To Fill Up US Petroleum Reserve - Energy Secretary

WASHINGTON (Pakistan Point News / Sputnik - 20th March, 2020) The Trump administration has asked Congress for $3 billion to buy 77 million barrels of crude from US oil producers to top up the country's Strategic Petroleum Reserve (SPR) and provide some relief to an industry hurt by prices that reached an 18-year low, Energy Secretary Dan Brouillette said on Thursday.

"The ultimate decision for the funding is going to be made by the Congress. We've asked for approximately $3 billion to cover the cost of the 77 million barrels," Brouillette said in a conference call with reporters.

Earlier on Thursday, the Energy Department said 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.

The SPR, which holds the nation's oil reserves in underground salt caverns in Louisiana, has a capacity of 713 million barrels. As of March 15, total volume of crude in its hold was at 649 million barrels, according to data from the Energy Information Administration, a division of the Energy Department.

US crude oil prices fell to 18-year lows of around $20 per barrel on Wednesday due to significantly lowered demand as a result of the novel coronavirus crisis and ill-timed output hikes by Saudi Arabia in the global market. Saudi Arabia is engaged in a battle for market share with Russian and US oil exporters.

In Thursday's trade, US crude increased as much as $5 a barrel, trading at around $25 per barrel, on news that the Energy Department has moved to top up the SPR to capacity.

Brouillette said in a statement issued by the Energy Department earlier on Thursday that the purchase will help US crude producers cover potentially catastrophic losses from the impacts of the novel coronavirus and the intentional disruption to world oil markets by foreign actors.

But during the conference call, Brouillette said the Energy Department's Primary aim was to take advantage of current market prices for crude, which had fallen nearly 60 percent on the year.

At $3 billion for 77 million barrels, the Energy Department would be paying just about $39 for a barrel of US crude - still delivering a premium of around $15 or 60 percent to the seller.