SPR Release -- Bids -- Companies and Average Price -- $107/BBL

I think folks will find this surprising: folks are willing to pay $107/bbl of oil from the American strategic petroleum reserve, and then pay for storing it in tankers off shore. Still wanna bet that oil under $95 is the price we will see by Labor Day?

Link here.

Note that a bank (Barclays) is bidding on 200,000 bbls; JPMorgan is bidding on 1.5 million. Since I don't recognize either as traditional oil companies, perhaps Barclays and JPMorgan are two of those "speculators" everyone complains about:

The bids total 30.64 million barrels of oil, with the average bid of 

$107.20 per barrel.

COMPANY                    VOLUME (barrels)     BID ($/barrel)
Valero Energy Corp            6.90 mln           105.62-109.76
Vitol Inc                     4.00 mln                  108.05
Shell Trading USA             3.65 mln           105.70-108.88
ConocoPhillips                2.10 mln           106.29-107.88
Plains Marketing              2.08 mln           106.78-107.78
Hess Corp                     2.00 mln           105.01-107.54
Marathon                      2.00 mln           105.80-107.80
ExxonMobil Corp               1.51 mln           107.34-108.94
JPMorgan                      1.50 mln                  105.33
Sunoco                        1.40 mln                  106.78
Tesoro                        1.20 mln                  107.08
Trafigura                     1.10 mln           105.20-107.20
Murphy Oil                    500,000                   106.73
BP PLC                        500,000                   105.04
Barclays                      200,000                   104.98

I assume the oil companies are bidding on this oil for their refineries, which if true, a) they expect to pay more than $107/bbl in the future; and/or, b) they know they will be short that amount of light oil in the near future.

If they thought they would be paying more than $107/bbl in the future, I would assume they would be bidding for more, unless storage costs were a limiting factor. Thus, my hunch is that refinery managers anticipate a light oil shortfall in the near future. I'm curious how others read this.


Call me old-fashioned but I just don't see folks willing to pay $107 for a barrel of oil, and then storing it in off-shore tankers until used, if they thought oil was going to be selling for $96 in a month. But then, maybe I'm missing something. 


From their website, Trafigura:

Established in 1993 as a private company, Trafigura is the world’s third largest independent oil trader and the second largest independent trader in the non-ferrous concentrates market. It has access to approximately US$24 billion in credit facilities, with investments in industrial assets around the world of more than US$1.9 billion.

Trafigura handles every element involved in the sourcing and trading of crude oil, petroleum products, renewable energies, metals, metal ores, coal and concentrates for industrial consumers.

Some might call Trafigura a "speculator" but their bid is actually at the low end of those on the list. Hmmm.



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