U.S. emergency crude oil stocks fell 8.4 million barrels last week to 434.1 million barrels, their lowest since October 1984, according to U.S. Department of Energy (DOE) data released on Monday.
The release from the Strategic Petroleum Reserve (SPR) in the week ended Sept. 9 was the steepest draw since May. It comprised of about 6.3 million barrels of sweet crude and around 2 million barrels of sour crude.
President Joe Biden in March set a plan to release 1 million barrels per day over six months from the SPR to tackle high U.S. fuel prices, which have contributed to soaring inflation.
The Biden administration is weighing the need for further SPR releases after the current program ends in October, Energy Secretary Jennifer Granholm told Reuters last week. A DOE spokesperson later said the White House at that time was not considering new releases beyond the 180 million barrels.
The Biden administration is less likely to release barrels from the SPR after October if benchmark oil futures continue to drop. Last week, the 50-day moving average of U.S. and European prices both fell below the 200-day moving average, noted research analyst Paul Sankey said.
The SPR stocks also have declined due to sales from congressional mandates and Biden's price initiative. The oil is sold to qualified oil companies via online auctions, and prices set using a five-day average bracketing the date of delivery.
The DOE has proposed to replenish the SPR by allowing it to enter contracts to purchase oil in future years at fixed, preset prices. The administration said it believes the plan would help boost domestic oil production.