The vast majority of the oil released from the US strategic petroelum reserve goes into off-shore storage vessels, or perhaps will be sent to Europe, making the US an exporter of light oil. Who woulda thought? About 80 percent will be moved to off-shore vessels. So, now, instead of the US government storing it, private companies are storing it. Something tells me they are not storing it for altruistic purposes. Average price paid: $107/bbl. This is absolutely crazy.
For all those who thought Barclays was an inappropriate bidder, they immediately put their oil into the pipeline. You could have done the same.
It looks like refiners were happy to get the oil (something tells me they did not pay a premium).
And it looks like everyone who bid, got their bid. Interesting.
Here are some highlights of the article:
Fifteen energy trading companies received contracts for crude oil from
U.S. emergency stockpiles, the Department of Energy said on Monday.
The bids total 30.64 million barrels of oil, with the average bid at
$107.20 per barrel.
About 80 percent of the offers for a drawdown of the
Strategic Petroleum Reserve crude were based on moving the oil by vessel.
Valero Energy Corp 6.90 mln 105.62-109.76 Pipeline: 3.85
Vessel: 3.05
Vitol Inc 4.00 mln 108.05 Vessel
Shell Trading USA 3.65 mln 105.70-108.88 Vessel: 3.0
Pipeline: 500,000
Barge: 150,000
ConocoPhillips 2.10 mln 106.29-107.88 Vessel
Plains Marketing 2.08 mln 106.78-107.78 Vessel
Hess Corp 2.00 mln 105.01-107.54 Vessel
Marathon 2.00 mln 105.80-107.80 Vessel
ExxonMobil Corp 1.51 mln 107.34-108.94 Pipeline: 930,000
Vessel: 580,000
JPMorgan 1.50 mln 105.33 Vessel
Sunoco 1.40 mln 106.78 Vessel
Tesoro 1.20 mln 107.08 Vessel
Trafigura 1.10 mln 105.20-107.20 Vessel
Murphy Oil 500,000 106.73 Vessel
BP PLC 500,000 105.04 Vessel
Barclays 200,000 104.98 Pipeline
You will have to excuse me I'm a little slow this evening. If wti is 97$ (give or take) and the "winners" paid 107$, then how did the "winners" not pay a premimum. Pls explain.
ReplyDeleteLocation matters. There is a steep discount in Cushing. Grade also matters.
ReplyDeleteCushing WTI $95.
Louisiana sweet $114.
(This is why the trains from ND to LA are profitable.)
Brent $116.
http://online.wsj.com/mdc/public/page/2_3023-cashprices.html?mod=mdc_cmd_cash
http://www.bloomberg.com/energy/
Does this sale just replace sweet oil from Libya for Italy?
Anon 1.
That's why I put winners in quotes, called the whole thing crazy.
ReplyDeleteI can't explain it either.
So much for speculators, huh?
To "anon 1":
ReplyDeleteI really don't know. Somewhat "tongue in cheek" I said that this oil was just going to Italy; their refineries must be getting close to having to shut down, just like Tesoro in Bismarck, North Dakota, when Williams County Commissioners unilaterally stopped all truck traffic in Williams County a few weeks ago.
I'm sure I'm wrong, but I certainly get the feeling that it was Italy (and maybe France) that was desperately hurting for light oil. Certainly the US is not hurting for oil. Our storage tanks are full.
Look at where the oil went: into off-shore vessels, either for storage or for Italy.
Well, what grade was the spr crude that the govt is selling? Other than speculation, why would someone rent a tanker? Unless you could export for a profit. Even if this is true, why couldn't you buy wti at 97$ and export that more profitably?. Something is not clear here. Either the buyers think they can make a profit or they just want to clear the 30mb from the market so prices do not drop. If that is what is happening, then US should sell MORE and if necessary replenish on price drop. I'm tired of USA being played for a sucker by oil cos.
ReplyDeleteWhich oil companies? OPEC?
ReplyDeleteXOM accounts for less than 3% of the world's total production. If XOM went away tomorrow, no one would notice except the shareholders.
All of the above. In 2008, the US was busily filling the spr with 140$ crude. How stupid is that? Something tells me that the "Industry" is playing the govt again on this spr release. I don't know how but it will become appearent at some time down the road. Free and fair are not words I associate with oil. Too many non transparent futures markets and too many nationalized exporting nations. Not to mention the political circumstances in north Africa and the middle east.
ReplyDeleteYou are probably correct; I can't argue with you.
ReplyDeleteHowever, the consensus in the mainstream media was that it was a political decision.
I think it was a decision based on panic: a) the IEA panicked when it looked like refineries in Italy were about to run out of light oil; and, b) President Obama panicked when he saw that the oil imports in May (the month before the announcement) set a new record. Of course, "we" (the average American) did not see those import numbers until yesterday.
Lack of Cushing storage would indicate excess supply. How does this relate to rising imports? The only explanation I can offer is that the imports were in the shipping channels (tankers) which had been contracted months earlier. This is a data point but in no way is conclusive of a us shortage. Oil can sit in tankers but at some point, it needs to be unloaded (delivered).
ReplyDeleteI agree. I don't understand it. Record imports in May, and yet the storage tanks in Cushing are full. One would think price of oil would fall, but it was up $2.30 today, and the dollar strengthened. Something tells me refiners are worried about adequate supplies six months from now.
ReplyDelete