Oil prices could find a floor near $80 per barrel as Biden administration considers refilling the Strategic Petroleum Reserve

• The Biden administration is reportedly considering refilling the Strategic Petroleum Reserve at $80 per barrel.
• Such a move could put a floor under oil prices following their three-month decline of about 30%.
• "A long-term trading range has taken hold with support near $85 per barrel," Fairlead's Katie Stockton said.

Oil prices could be due for a rebound after falling about 30% since early June, according to a Tuesday note from Fairlead Strategies' Katie Stockton.

She said WTI crude oil futures confirmed a "short-term counter-trend 'buy' signal" on Monday, supporting the potential for an oversold bounce that lasts at least two weeks.

"The rebound follows a breach of long-term support that suggests a long-term trading range has taken hold with support near $85 per barrel and minor resistance at the 50-day moving average," Stockton said.

WTI crude's 50-day moving average is currently at about $94 per barrel, representing potential upside of about 4% from current levels.

Her bullish technical view on oil received a fundamental boost on Tuesday following a Bloomberg report that said the Biden administration is considering a plan to refill the Strategic Petroleum Reserve if oil falls to around $80 per barrel. WTI crude oil hit a low of $81.20 per barrel last week.

The potential move by the Biden administration is seen as protecting US oil-production growth by preventing crude prices from plunging further.

Via strategic releases of the oil reserve, the Biden administration is attempting to delicately balance a surge in oil prices — and therefore a surge in inflation — against a crash in oil prices that would negatively impact the US-based oil sector and incentivize them to invest less into production at a time when US energy independence is seen as a crucial national security issue.

Since the start of the year, the Biden administration has reduced US crude oil in the Strategic Petroleum Reserve to 442 million barrels from about 600 million barrels, according to data from YCharts. The move was seen as a way for the administration to lessen the damage on consumer wallets at the gas pump as oil prices surged in the aftermath of Russia's invasion of Ukraine.

The move arguably worked, as US gas prices have been consistently falling since June from an average high of more than $5 per gallon to just $3.71 per gallon today, according to data from AAA.

But if the Biden administration is on the verge of strategically purchasing more than 100 million barrels of oil at around $80 per barrel, a floor has likely been set in oil markets until the SPR is filled back up.

Oil prices were essentially flat on Tuesday despite a hotter-than-expected CPI report that showed elevated inflation remains sticky.