News, Updates, and Comments on the SPR

Update

July 22, 2011: I guess I was wrong. It wasn't about the price at all. Oil is hitting $100 today, and IEA says it won't release more oil from the global strategic reserves. CNBC talking head says regardless of what IEA does, price of oil will come down: Brent oil will drop back to $85 by the end of the year (due to sluggish demand and skittishness caused by debt crisis in the euro-zone, and a stronger dollar).

July 21, 2011: Price of oil will come close to hitting $100 today.

July 15, 2011: IEA releases statement on the status of oil markets post-release, and rationale for the release.

July 5, 2011: Bidders and bids for oil to be released from the US SPR. Data available on July 1, 2011; I did not see it until today. It appears refiners need the light oil, and two banks are "speculating," as well as the world's largest private commodity trader. Wow, it must gall some folks to see these "speculators" buying up oil that was meant to be held for emergencies. Quoting a famous line in Casablanca: I'm shocked! I'm shocked!" Elsewhere others suggest the IEA could dip into emergency reserves periodically in an attempt to stem price increases.

July 5, 2011: New data points on the SPR release, as well as comments. At 4:18 EDT, I see oil was up $2.08 from the previous close. This is the first trading day of the second week following the announcement of the SPR release.

July 5, 2011: Now it's an AP story -- "Oil Climbs Above $97."

Some major investment banks are still betting that oil prices will grow next year despite an emergency injection of crude on world markets from the U.S. and other countries.

Benchmark crude rose as high as $97.48 per barrel Tuesday after Barclays Capital raised its price forecast for 2012. And Goldman Sachs said the International Energy Agency's decision at the end of June to release 60 million barrels of oil from its reserves won't cool off prices as much as originally thought.

Independent oil analysts say prices still could head lower this year. But some think IEA's announcement speaks volumes about its expectations for world oil supplies.

"I think it's an admission from them that Saudi Arabia might not be able to produce enough oil on its own" to meet increased world demand, analyst Stephen Schork said.

July 5, 2011: Price of WTI oil continues to rise, almost up another $2.00 today; up to $96.78 (up $1.84). Last week, folks suggested the price of oil would come down as the released SPR oil made its way through the system. I assume this has to do with two things: a) Barron's article over the weekend that suggested oil at $150 by next spring; and, b) the front page story in the LA Times suggesting no easy end to the Libyan "event.' Back on March 18, the president said "Libya" would last days, not weeks. Well, now we are into months.

June 29, 2011: Dayton, Ohio -- gasoline up 20 cents in one day. Isn't Ohio one of those important presidential election states? Fortunately we opened the strategic reserve last week.  

June 29, 2011: AP -- "Oil Rebound Weakens Effect of Oil Release" -- will, doh!

The sway that non-OPEC governments had over oil and gasoline prices petered out in less than a week.

Benchmark crude hit $95.21 per barrel Wednesday on the New York Mercantile Exchange. Over two days, oil has recovered the loss from last Thursday when the U.S. and other oil-importing countries said they'd dump emergency oil supplies onto the market.

Brent crude, which is used to price many international oil varieties, also rebounded. Although at $111.95 per barrel, it's still about 2 percent below where it was last week.

The swift rebound in oil means that motorists won't see as big of a discount at the gas pump as expected. By Wednesday afternoon, gasoline futures recovered about 20 of the 26 cents per gallon that were lost after the International Energy Agency, which includes the U.S., said it would make 60 million barrels of crude and other fuels available this summer.

My hunch: this is just the beginning of the releases from the strategic petroleum reserves -- anything to disrupt the oil industry. 

June 29, 2011: Of course, this link will change -- it is a dynamic site -- but the Drudge Report headline and graph, with oil up almost $5.00 in past two days: "Superspike: Oil Soars Despite Obama Release of Reserves."

Timeline: Price of Oil Higher Than Before The Announcement

Lest we forget:

• June 23, 2011, moments before the announcement: $94.30
• June 23, 2011, low: $89.90
• June 24, 2011, close: $90.85
• Weekend
• June 27, 2011, close: $90.89
• June 28, 2011, high: $93.35
• June 29, 2011, high: $95.63
• July 2 - 4, 2011, holiday weekend
• July 5, 2011, first day of second week since announcement: up $2.08 to $96.98 (high for the day?)
• July 7, 2011, bulls run: up over $2.00 hitting an intra-day high of $99.27 
• July 15, 2011: some volatility; up $1.44 today; $97.13 
• July 19, 2011: oil up 2%; near $98
• July 21, 2011: spike again; intra-day high - $100.19
• July 26, 2011: firmly above $100
  

Most memorable comment sent to me on June 24, 2011: this will move the speculators to the sideline and oil will fall below $80. And it still might.

Original Post

Coming just days after the announcement that 17 hours worth of global oil consumption will be released from strategic petroleum reserves around the world, the price of oil is almost back to where it was before the announcement.

Who woulda thought?

Up $1.76 to about $95 at 7:55 PDT, June 29, 2011.

And that's on top of the $2.00 pop yesterday.

Where is Saudi on this?

I know this has nothing to do with supply and demand; it all has to do with the strength (or weakness) of the dollar. But having said that, one wonders if folks suddenly realized that yes, 60 million barrels represents only 17 hours of global consumption. By the way, I've seen no stories yet that suggest any American oil company or refinery has requested any light oil from "our" strategic petroleum reserve.

My hunch is that 17 hours won't be enough to meet European summer driving demand and non-US governments will silently release even more, assuming they have more to release.  Unless, of course, everything's back to normal in Libya by this time next week.