Just because governments around the world say they are going to release oil from their strategic petroleum reserves, it doesn't mean that they will actually deliver any oil from their reserves:
Karen Matusic, a spokeswoman for ExxonMobil, the world’s biggest oil refiner, declined to comment on whether the company plans to request any supplies from the strategic reserve. Chevron and Shell also declined through spokesmen to discuss their crude needs or attitudes toward the availability of strategic stockpiles.And then this:
Storage tanks used by oil producers at the crude-trading hub in Cushing, Oklahoma, held 38 million barrels as of June 17, 41 percent above the five-year average for this time of year, according to Energy Department figures. Stockpiles at Cushing reached 41.9 million barrels in April, 2011, the highest point since at least 2004, when the Energy Department began tracking the figures.Interesting, very interesting.
U.S. crude imports are almost 10 percent lower than a year ago. Refiners brought 9.15 million barrels a day of oil into U.S. ports last week, down 9.5 percent from the same week in 2010, according to Energy Department data. Demand for foreign crude in the world’s largest economy dipped to a 24-month low of 7.69 million barrels a day in December.
“This action today will do nothing to benefit consumers,” Charles Drevna, president of the National Petrochemical & Refiners Association, said in a statement. “Instead, it leaves our nation vulnerable if hurricanes, other natural disasters or a foreign crisis causes a real supply shortage.”
The 60-million-barrel release is scheduled for the next 30 days. I assume all oil that is being delivered over the next 30 days is already contracted. Much of this oil is already in storage containers and much of it is slogging its way across the oceans. This whole announcement seems really, really bizarre.
It will be interesting to see how much oil is actually requested; I wonder if the administration will provide that figure.
Well, if there is NO drawdown (as the xom statement implied) and the world price drops (it went down 5% today) then how does the consumer not benefit ?
ReplyDeleteMr Drevna's statement looks absurd but we will see what actually happens from here on. My view is that speculators will move to the sidelines and price will decrease reflecting their exit from the "market".
In the short term you are correct.
ReplyDeleteOil futures are up slightly today, and oil is holding above $90.
My point all along has been that Saudi could not make up the difference despite what they said, and "every" pundit has come to the same conclusion.
See my previous posts regarding speculators.
Most interesting to me is the CNBC headline story today saying the act was one of "desperation," the same word I first used as soon as I heard the story. I thought I might be out of the mainstream on that thinking, but apparently not.
The goal was to help the economy, or as you say, help the consumer. See my posts regarding how this will affect job creation, which was the real purpose.