The U.S. intends to sell the largest amount of strategic oil reserves since 2014, at a time when expectations for demand for fuel are declining with the return of the number of people infected with the emerging coronavirus to the rise.
The Energy Department plans to auction off 20 million barrels of crude, twice as much as it offered for sale 3 1/2 months ago. The oil will be delivered during the fourth quarter, when U.S. demand for gasoline and other fuels typically falters and refineries slow down oil purchases while they shut down equipment for repairs and maintenance.
The announcement of the sale of quantities of the strategic oil reserves came at a time when crude prices fell by 15% compared to its level in early July, which was its highest level in 6 and a half years.
Bloomberg indicated that the United States will not face a problem in selling quantities of crude oil, given that current production does not fully meet the volume of demand, according to John Coleman, an expert on the North American oil market at Wood Mackenzie Consulting.
Coleman believes that the market will continue to face a shortage of supplies during the last quarter of this year, and thus the quantities that the US administration will put up for sale will be absorbed.
Sources:
- Bloomberg