By Adedapo Adesanya
The prices of the major crude oil benchmarks settled lower on Thursday after the United States government said that refilling the country’s Strategic Petroleum Reserve (SPR) may take several years.
Brent crude futures fell by 78 cents or 1 per cent to settle at $75.91 a barrel, while the US West Texas Intermediate crude futures slid by 94 cents or 1.3 per cent to end the session at $69.96 a barrel.
US Energy Secretary, Mrs Jennifer Granholm, told lawmakers on Thursday that it would take years to replenish the nation’s reserves.
When the administration of Mr Joe Biden sold off 221 million barrels of crude oil from the SPR last year, the idea was to buy oil to replace what was withdrawn.
In October 2022, the government announced that it would repurchase crude oil for the reserve when prices were at or below about $67-$72 per barrel.
The move would serve two purposes in that not only would it replenish the nation’s depleted reserves, but it would also boost demand when prices were low instead of sending them into orbit at a time or regular prices.
However, the comments fed worries about potential oversupply, especially as the Energy Department plans to proceed with an additional release of 26 million barrels as part of its congressional mandate.
The SPR currently holds 372 million barrels of crude oil, down from 638 million at the beginning of 2021. It is the lowest level since December 1983.
This overtook other signals that would normally have supported oil prices at the market on Thursday.
The Dollar index traded at its lowest since February 3, a day after the Federal Reserve hinted it was nearing a pause in interest rate hikes.
A weaker greenback makes dollar-denominated oil more attractive to holders of foreign currencies.
Also, the US Energy Information Administration (EIA) said stockpiles of the product fell last week by the most since September 2021.
Goldman Sachs said commodities demand was surging in China, the world’s biggest oil importer, with oil demand topping 16 million barrels per day.
It forecast Brent would reach $97 a barrel in the second quarter of 2024.
