Washington The U.S. Department of Energy said on Friday it will sell 18 million barrels of crude oil from its strategic petroleum reserve (SPR) on Dec. 17, as part of a previously announced plan to try to reduce oil prices.
The Biden Administration announced last month it would release about 50 million barrels from its reserves in conjunction with other countries to combat the rising cost of fuel.
The White House has been trying to deal with Americans' worries about high fuel costs, even though the president has few tools to deal with the price of crude, a global market influenced by numerous factors.
“The President rightly believes Americans deserve relief now and has authorized the use of the SPR to respond to market imbalances and reduce costs for consumers," said Energy Secretary Jennifer Granholm.
Oil prices rose to seven-year highs at more than $86 a barrel due to surging fuel demand worldwide, but have dropped by nearly 13% since late October, in part due to the U.S. announcement and the emergence of the Omicron variant of coronavirus that has dented travel around the world.
The Brent benchmark ended at $75.15 a barrel on Friday.
The 18 million barrels to be sold had already been approved by Congress in 2018. The remaining barrels will be issued in coming months through exchanges. The first exchange of 4.8 million barrels will be with Exxon Mobil Corp, the largest U.S. oil company.
U.S. retail gas prices are currently averaging $3.33 a gallon, the lowest since mid-October, according to the American Automobile Association. Prices peaked at $3.42 a gallon early in November.
The United States holds roughly 600 million barrels of crude oil in giant caverns in Texas and Louisiana. Its current inventory is at its lowest since 2003.
Meanwhile oil prices rose on Friday slightly and were on track for their biggest weekly gain since late August, with market sentiment buoyed by easing concerns over the Omicron coronavirus variant's impact on global economic growth and fuel demand.
The Brent and U.S. West Texas Intermediate (WTI) crude benchmarks were both on course for gains of about 8% this week, their first weekly gain in seven, even after a brief bout of profit-taking.
Brent futures were up 42 cents, or 0.6%, at $74.85 a barrel by 2:06 p.m. Eastern (1706 GMT) after falling 1.9% on Thursday.
WTI rose 43 cents, or 0.6%, to $71.37 after sliding 2% in a volatile session the previous day.
"Oil traders are coming out of their shell-shock and feeling more bullish as they recalibrate their demand expectations in the aftermath of the Omicron variation of the coronavirus," said Phil Flynn, senior analyst price futures group in Chicago.
U.S. consumer prices rose further in November to produce the largest year-on-year rise since 1982, government data showed, adding to bullish sentiment on oil demand.
Earlier in the week the oil market had recovered about half the losses suffered since the Omicron outbreak on Nov. 25, with prices lifted by early studies suggesting that three doses of Pfizer's COVID-19 vaccine offers protection against the Omicron variant.
"The oil market has thus rightly priced out the 'worst-case scenario' again, but it would be well advised to leave a certain residual risk to oil demand in place," said Commerzbank analyst Carsten Fritsch.
Keeping a lid on prices are faltering domestic air traffic in China, owing to tighter travel restrictions, and weaker consumer confidence after repeated small outbreaks.
Meanwhile, ratings agency Fitch downgraded property developers China Evergrande Group and Kaisa Group, saying they had defaulted on offshore bonds.
That reinforced fears of a potential slowdown in China's property sector, as well as the broader economy of the world's biggest oil importer. Reuters
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