Oil fell $5 yesterday and bounced $1.60 today, still leaving it near the lowest level since January.
In the last hour, a report is crossing saying the Biden admin is 'hunting for ways to head off a feared spike in oil prices later this year' once the planned SPR ends. The report says a further release of crude reserves is possible.
"The officials are warning of an increase in prices this December when EU sanctions on Russian supplies take effect, unless other steps are taken, according to people familiar with the deliberations"
It notes that the talks are preliminary but it's a sharp change from last month when officials ruled out a further SPR release. The reserve is at 1984 levels but will still hold about 400 million barrels after the current planned release ends in October.
In theory, that could mean releasing at the current pace of 1 million barrels per day for another 400 days but some market watchers believe the reserve needs to be maintained at 300 million barrels to maintain operational efficiency. The report hints at three more months of releases, which would take the reserve close to that 300 million barrel level.
The latest talks might have gained importance after a big hurdle hit Iran-nuclear talks. G7 finance ministers also agreed to a Russian oil price cap and an EU ban. Those are scheduled to go into effect on Dec 3.
Biden has no doubt seen his and Democrats' approval ratings rise as oil and gasoline prices fall. That alone ensures the SPR will be used as a political tool in the future. However allowing the current plan to end in October risks kicking off a rise in gasoline prices just before the November 8 midterms.
