Global oil prices eased from one-month highs Tuesday amid reports that President Donald Trump will propose tapping into U.S. crude supplies as part of his budget proposal.
Trump's 2018 budget, which will be handed to Congressional lawmakers later today, will include plans to sell around half of the 688 million barrels currently sitting the U.S. Strategic Petroleum Reserve -- the world's largest crude stockpile -- in order to raise around $16.6 billion over the next ten years and reduce the country's deficit. The proposal comes just days before a meeting of OPEC officials in Vienna in which the cartel is expected to agree an extension of their current production cuts which, along with their allies, is taking around 1.8 million barrels per day from global crude markets.
WTI futures for July delivery, the new U.S. pricing benchmark, were marked 0.1% lower from their Monday close at $50.60 while Brent crude contracts for the same month were seen 0.05% lower at $53.38 per barrel.
Any decision to sell SPR stocks can be made by the President under the Energy Policy and Conservation Act, according to the U.S. Energy Department website. The last time SPR stocks were tapped was in 2011, when President Barack Obama authorised the sale of 30 million barrells "to offset disruptions in supply due to Middle East unrest", the Energy Department said.
The SPR has a drawdown capacity of around 4.4 million barrels per day and would likely enter the market around 13 days after a Presidential decision, according to the Energy Department. The average price paid for each barrel current in stock is around $29.70.