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U.S. Oil Producers Begin Storing Crude in Strategic Reserve

By Stephen Cunningham

(Bloomberg) U.S. oil producers running out of space for storage amid an unprecedented slump in demand have started making deliveries to the nation’s emergency stockpile.This month, 1.1 million barrels have been delivered into Strategic Petroleum Reserve storage. The Energy Department has finalized contracts announced earlier this month for companies to rent about 23 million barrels of capacity in the SPR, according to an official.

On April 14, the department said it was negotiating leasing deals with nine producers, with most of the oil to be delivered in May and June, and possible early deliveries in April. It’s part of a plan by the Trump administration to help drain the nation’s growing glut of crude as commercial storage quickly fills up.

The oil earmarked for storage under the program was to be aggregated from small, medium and large producers and companies can schedule return of their crude through March 2021, minus a small amount to cover storage costs.

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