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The
result: nearly 80% of respondents said they did not expect oil
futures next year will fall to a level that would trigger any
U.S. purchases - negating any boost from what analysts called
the "U.S. put," or using proposed Strategic Petroleum Reserve
buys to set a minimum price for new oil production.
"That announcement was making it appear like he was throwing a
bone to the oil industry," said Tricia Curtis, CEO of
consultancy PetroNerds, who dismissed the offer.
"What if oil does not fall to that price: Do we just keep our
reserves low?" she asked.
The release of the last of a 180 million barrel sale coupled
with a repurchase price was Biden "trying to walk a fine line
between supporting his green base and trying to lower fuel
prices. And he did neither," said Curtis.
A U.S. Department of Energy spokesperson was not immediately
available to comment.
Oil is now selling for about $85 a barrel and the about $70
offer "is a price where there is no supply growth," said Abhiram
Rajendran, a director at consultancy Energy Intelligence.
U.S. oil prices hit $120 per barrel this year and did not
trigger a production boom because of shortages and high costs
for labor and equipment, said Hunter Kornfeind, oil market
analyst at Rapidan Energy Group.
Rebecca Babin, senior energy trader at CIBC Private Wealth, said
tight oil supplies have pushed up price expectations into 2024.
But that occurred apart from the SPR offer, she said.
Oil-futures through mid- to late-2024 are trading about $72 a
barrel, meaning oil producers can lock in the sales price of
future production around the level set for SPR purchases, said
Kornfeind.
If the Biden administration wants to boost oil supplies, it
"should change its policies around producing more oil and gas in
the United States," said Frank Macchiarola, a senior vice
president at trade group American Petroleum Institute.
(By Arathy Somasekhar in Bangalore, Stephanie Kelly in New York;
writing by Gary McWilliams; Editing by Robert Birsel)
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