Analysts say the U.S. Department of Energy may start to sell off some of its strategic petroleum reserve (SPR) this month, as it initiates a multi-year process to shrink the American stockpile of oil.
The U.S. Congress has authorized DOE to sell off $375.4 million worth of oil in its recent budget resolution, and the DOE said that such a sale could be held as early January 20.
The price of crude oiltoday was $52.34, down 3.06%.
The price of Brent oil at about 1:30 p.m. today was $55.40, down 2.98%.
The price of natural gas was also down today on intraday trading.
Crude oil settled at $52.03, up 0.13%. Brent oil settled at a two-week low of $54.94 a barrel, down 3.99%.
Analysts say the government's motivation to sell its crude oil is rather simple: to finance maintenance for the SPR.
The reserves are located in salt caverns in Louisiana and Texas, which were established decades ago in the wake of the Arab Oil Embargo in 1973.
The SPR can hold more than 700 million barrels of oil at one time, and is the largest strategic stockpile in the world.
The SPR holds 90 days’ worth of oil supplies, which could be released in the event of a global outage.
A release from the SPR has only happened a handful of times, including the Persian Gulf War in the 1990s, and Hurricane Katrina and the Arab Spring during the 21st century, experts noted.
