The US is planning to sell of some of it's strategic oil reserves to raise cash for budget deal
Probably one of the main reasons for the dump in oil today is the fact that the US is going to sell around 58m barrels in oil between 2018 and 2025. They hold around 700m in reserves and want to offload around 8% of that at an annual rate of 5m barrels starting 2018 and rising to 10m by 2023
Supposedly all the proceeds will be "deposited into the general fund of the Treasury,", according to the budget deal. Bloomberg note that they may sell an additional $2bn's worth of oil to cover a project to modernise the strategic reserves
The US paid an average of $29.70 for their reserves but after adjustments that figure is around $74, says research firm Clear View Energy. With prices at $43 odd they'd be selling at the lows
If oil has mainly moved on this story then it's not something that should last. It's over 2 years away and then spread over a 7 year period. Lots could happen in that time so I wouldn't use this story to chase the price down. Right now the inventory builds are the real driver
I'm also thankful to our readers for highlighting the story which was out earlier today. The full Bloomers article is here
