Benzinga - The crude oil market continues to crumble Wednesday, and it's possible the U.S. government could look to replenish its stash after releasing a historic amount of oil from the strategic petroleum reserves (SPR) last year.
What To Know: Crude oil prices continue to fall in the wake of a historic run that saw oil trade to 13-year highs amid supply disruptions brought on by Russia's invasion of Ukraine.
Front-month WTI Crude futures plummeted to three-month lows this week after a fallout in the financials caused a heavy sell-off in stocks, which has leaked into the oil markets.
Several banks faced heavy selling pressure following the collapse of SVB Financial Group (NYSEW:SIVB) toward the end of last week, which sparked contagion fears in the broader banking industry.
Oil futures are now approaching levels not seen since 2021 after new Credit Suisse concerns poured gas on the fire already burning with fears of widespread instability.
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Why It Matters: Benzinga previously reported that President Joe Biden released a historic 180 million barrels of crude oil from the strategic petroleum reserves from March to November 2022 while oil prices were elevated.
As OPEC+ cut supply and prices rose, the Biden administration tapped reserves to help Americans avoid paying high prices, and it's looking like the timing was spot on. With prices in freefall, it's possible that Biden will buy more oil to stockpile American reserves in an effort to mitigate future prices at the pump if something sparks a reversal in oil prices, and we trend back toward the extremely high prices we saw last year.
The U.S. government already purchased about 2 million barrels for the SPR near the end of 2022, according to CNBC's Brian Sullivan.
However, Sullivan noted that oil prices would likely need to remain suppressed for a while for Biden to step in and make "significant purchases."
"OPEC won't let oil sit in this price for long. Not with global banking contagion fears spreading," he added.
The average price at the pump currently sits at $3.466, according to data from the American Automobile Association. The price for a gallon of gas is down significantly from the year-ago average of $4.316 and well off the highest average ever recorded of $5.016 in June 2022.
Read Part One: Biden The Master Oil Trader? Crude Drops Below $80 And US Government May Earn Windfall On Emergency Reserves, Relieving Pain At The Pump
Price Action: Front month WTI Crude futures were trading down 5.41% at $67.47 and Brent Crude futures, the international benchmark, were down 5.26% at $73.38.
The Energy Select Sector SPDR Fund (ARCA:XLE) was plunging 5.58%, trading at $77.20 at last check, according to Benzinga Pro.
Photo: Gage Skidmore from Flickr.
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