The Energy Department last week rejected all offers to replenish the stockpile.
One of the biggest roadblocks to refilling the US emergency oil reserve: Price volatility.
The Energy Department last week rejected all offers to replenish the stockpile, citing among other factors that the proposals were too expensive. But some traders who made offers said the length of the sale window — nearly 2 weeks, compared with about 48 hours for most crude tenders — left them open to big market swings. Had they priced their crude too low, they might have left money on the table, they said, asking not to be named discussing confidential matters.
During the Energy Department’s offer window, US crude futures traded in a massive $9 range. That kind of volatility stands to frustrate efforts to refill the reserve after stocks depleted last year. While the Biden administration would like to buy oil for much less than the $102-a-barrel price at which it sold last year, market conditions may not be conducive — effectively spoiling the White House’s plan to “buy low, sell high.”
–With assistance from Ari Natter.
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