March 10, 2020 / 2:47 PM / 25 days ago

U.S. suspends oil sale from strategic reserve amid price drop

FILE PHOTO: An oil storage tank and crude oil pipeline equipment is seen during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson

WASHINGTON (Reuters) - The U.S. Department of Energy said on Tuesday it has suspended a sale of up to 12 million barrels of oil from the government’s emergency crude reserve due to the petroleum price drop.

The DOE had announced the Strategic Petroleum Reserve sale in late February, before the coronavirus outbreak and a price war between major oil producers Saudi Arabia and Russia sank crude prices.

Crude prices suffered their biggest daily rout since the 1991 Gulf War on Monday, but pared some of the losses on Tuesday as investors eyed the possibility of economic stimulus and Russia signaled that talks with OPEC remained possible.[O/R]

“Given current oil markets, this is not the optimal time for the sale,” said Energy Department spokeswoman Jess Szymanski.

The sale had been mandated by a 2015 law to fund maintenance and upgrades at the reserve, held in a series of salt caverns on the Texas and Louisiana coasts where heavy machinery is exposed to moist, salty air.

Reporting by Timothy Gardner and Susan Heavey; Editing by Chizu Nomiyama and Marguerita Choy

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