Details Yet To Come -- Obama To Release Oil From SPR? -- Never Mind

Updates

March 19, 2012: beating a dead horse. Three more refineries, representing one-half of the refining capacity in the northeast, are slated to close this year. The pipelines are already full; the terminals at Cushing are full; and, now on top of this, three less refineries to ship crude to. All things being equal, this alone should lower the price of domestic crude oil (I see oil is up about 65 cents in futures today). So, opening the SPR, flooding the already-full pipelines to take crude where refineries no longer exist .... well, that makes a lot of sense. Based on price action of oil on Friday with the "announcement" that oil from the SPR would be released, one can expect that the price of domestic oil will drop from $107 to $104. Okay.

Later, 423 p.m.: I think Reuters got it just right. CNBC got it wrong by saying the SPR release was imminent, or certainly implying that. My hunch is that Washington and Great Britain have agreed in principle that if Brent oil and/or WTI oil hits a certain threshold, oil from emergency reserves will be released. My hunch is that this is the threshold: Obama's polling numbers drop below 39% favorable, er, I mean is Brent goes above $150, and/or WTI goes above $125. The US won't use those numbers as the official numbers, but provides a framework around which the UK can anticipate.

Later, 1:23 p.m.: I see oil just went green by a penny. Now 13 pennies. Now 17 cents. Ah, yes, the threat of algae.

Later, 12:20 p.m.: just moments after posting the note below, I had a thought which I will get to in a moment. But this first --  CNBC (12:20 p.m., March 15, 2012) is now reporting that a release from the SPR is inaccurate. Obama was consulting with the Brits on releasing oil from the SPR, but there was no decision made.  Does anyone else find it interesting that this trial balloon was released on this particular day?

Now back to my thought: think about this. If the president releases oil from the SPR, could one argue that things might be tighter (or will get tighter) than the administration is willing to admit? Why release oil now from the SPR based on recent comments from the administration? The president says oil always goes up this time of year; not to get excited; his task force will check into it; and, of course, there's always algae to fall back on. Everything he's been saying for the past few weeks: there is nothing to worry about.

Now, if all of a sudden, with no new news, no new developments, all of a sudden out of the blue, the Brits decide to release oil from emergency stocks, doesn't that suggest to a rational thinker that the Brits expect something to happen in the Mideast to result in sudden spike in the price of oil?

Very interesting to watch. My 2 cents worth: if the Brits release oil from their emergency stocks, something is up. If the US releases oil from the SPR, it's politics.

Original Post

With a glut of sweet oil at Cushing, releasing oil from the SPR should be a big help.

As I've noted many, many times, I don't get it.

For archival purposes, oil drops about $1.35 on the announcement, from $105 range to $104 range. I will tag this for follow-up in July, 2012, to see how this plays out.

At least we now know the SPR is a political slush pool to manipulate the price of oil.

I'll post the next presidential poll when it becomes available.

By the way, have you noticed? The US, since the Bush days, is no longer acting unilaterally on almost anything. We get at least one other country to join us so that the president has political cover. Gingrich, whether you like him or not (and I don't), was correct when he said his comments on the price of oil were "getting inside the President's head."

"So do not tell me that we're not drilling. We're drilling all over this country. There are a few spots we're not drilling. We're not drilling in the national mall. We're not drilling at your house." -- Link here.  What about algae?

I see now, crude oil has just recovered, almost back to where it was, down 49 cents. Well, that was short-lived. All in the time it took me to write this one post.

As noted above, I don't get it (the price of oil).

Talking head on CNBC, 12:05 p.m., March 15, 2012:

"I'm skeptical oil can remain above $100 for very long. I'm skeptical these prices are sustainable. But I'm not willing to put my money where my mouth is. I have no trade in oil. China is pulling back on its commodity purchases: cement, copper, aluminum. Oil has been the outlier. I don't think oil an remain above $100 for very long. At some point it will revert back toward the mean."