Oil closes higher on US plan to refill strategic reserve

Oil drilling rigs

Oil closed higher today, May 9, with the US announcing its intention to replenish the Strategic Petroleum Reserve (SPR).

Brent crude settled 43 cents, or 0.6% higher, at $77.44 a barrel, while West Texas Intermediate (WTI) crude closed up 55 cents, or 0.8%, at $73.71.

US Energy Secretary Jennifer Granholm has said the administration could start buying back crude oil for the SPR later this year.

Meanwhile, the US Energy Information Administration (EIA) in its monthly report said that the seasonal increase in oil consumption and the decrease in OPEC’s crude oil production will put some upward pressure on crude oil prices in the coming months.

However, EIA lowered its forecast on crude oil prices for this year and next, stating that the weak global economic conditions, perceived risks around the global banking sector, and persistent inflation overshadowed the initial increase in oil prices and led to lower prices.

The agency lowered its expectations for Brent crude during the current year by 7.5% to $78.65, and by 8.3% to $74.47 during 2024. Estimates on WTI crude during the current year were lower by 7.1% to $73.62, and by 7.6% to $69.47 in 2024.

The American Petroleum Institute’s report on oil inventories is expected to be issued later today, and the EIA is scheduled to release official data for inventories on May 10, amid expectations that crude stocks will decline by 1.6 million barrels.