The U.S. is holding its largest sale of oil from strategic reserves this year at a time when the outlook for fuel demand is darkening amid the resurgent Covid-19 virus.
The Energy Department plans to auction off 20 million barrels of crude, twice as much as it offered for sale 3 1/2 months ago. The oil will be delivered during the fourth quarter, when U.S. demand for gasoline and other fuels typically falters and refineries slow down oil purchases while they shut down equipment for repairs and maintenance.
The sale also comes after crude prices have dropped 15% since touching a 6 1/2-year high in early July as the spread of the delta variant threatens to derail the economic recovery and return to business as usual. Companies including BlackRock Inc. and Jefferies Financial Group Inc. are postponing plans to return workers to offices.
The reserve, created in 1975 to serve as an emergency stockpile, held 621 million barrels in four underground caverns as of Aug. 13, Energy Department figures showed.
Benchmark American crude futures rose almost 6% on Monday in New York amid a broader rally in commoditiues and equity markets.