The initial disruption to oil output in Libya happened at a "fortuitous" time for European oil refiners as many were closed for maintenance.
"Now we're going into the summer driving season, those refineries which have returned to operation are about to ramp up their production."American refiners switched to summer blends about 1.5 to 2.0 months ago. American refiners are well past the switch to summer blends. American storage tanks are at their fullest in years.
Jones said the market was facing a possible shortfall of 1.8 million barrels per day for the remainder of June and 1.7 million for the next quarter.
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.The Europeans generally take their vacations in August, and their refiners are just beginning to switch to summer blends and getting ready for August driving and increased air traffic.
If any oil is released from American strategic petroleum reserves, it won't be going to American refineries; it will be going to European refineries.
If finally makes sense. It made no sense for the release of oil from the US strategic petroleum reserve if one simply looked at the American situation.
By the way, at the right price, this could also help provide American with a better balance of payments this quarter.
(Reminder: American oil -- particularly the Bakken is light oil, the kind the European refineries use and were getting from Libya -- particularly the Italian refineries. Saudi oil is heavy oil and not "wanted" by Europe.)
