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DOE Announces Details Of Strategic Petroleum Reserve Firesale
Following the earlier general announcement that the SPR would sell 30 MM barrels of oil a lot of questions were left unanswered, such as what kind of crude will be sold, where will it be sold from, and at what price. The wait for answers is now over: The DOE has just released all the missing data. Per Reuters: "Under the terms of the U.S. sale that were issued by the department, the government does not plan to stagger the sale of the oil and will offer all 30 million barrels in one bid sale. The department will offer "sweet" crude oil from three of the reserve's storage sites: Bryan Mound and Big Hill in Texas and West Hackberry in Louisiana. The oil will have a base price of $112.78 a barrel, a spokeswoman for the SPR said." Which does not however mean that this is the price at which the oil will be sold: "Traders can bid above or below the "Base Reference Price" of $112.78, which is derived from the last five days of trading of Light Louisiana Sweet crude oil, as assessed by energy pricing agency Argus. Companies will submit their bids for the oil through a special department website. Delivery of the oil to the winning companies would take place over the month of August. Winning companies would pay for their oil during the month after the crude is delivered." Which simply means that China will convert quite a bit of America's trade deficit from dollars into oil.
And as a reminder, here is why China, which is now actively filling up its own SPR, couldn't be happier about this development. From Zero Hedge March 7. Paraphrasing from Dow Jones:
China
will start work on building strategic oil reserve tanks at the
north-eastern port of Tianjin by May, China Daily newspaper reported
Saturday.Work will be completed before the end of China's
2011-2015 five-year economic plan, and filling this reserve will start
when the oil price is "appropriate", Tianjin city official He Shushan
was quoted as saying.China's efforts to build up oil stocks are
closely watched by energy market analysts, as its demand for oil is a
key driver of global prices and huge amounts of crude are needed for the
project. China imports more than half the oil it uses.The
reserve site in Tianjin is among eight stockpiling bases being prepared
in the second phase of China's strategic petroleum reserve project.These
eight sites will have 26.8 million cubic meters of capacity, able to
store the equivalent of 169 million barrels of crude oil.The
western countries' energy watchdog, the International Energy Agency, has
repeatedly criticized Beijing for not publishing national oil stock
volume figures, which are needed to calculate global oil demand.Sites
for other second-phase bases include Zhanjiang and Huizhou in Guangdong
province, Lanzhou in Gansu province, and Jintan and Jinzhou in Liaoning
province.China's petroleum reserve capacity was enough for 39
days of consumption by the end of 2010, with this comprising the SPR oil
and a further 168 million barrels of commercial reserve capacity, state
energy giant China National Petroleum Corp. said in January.
It is not only China: all of Asia is taking the prudent step of preparing for a very long storm. From the FT:
As
oil prices spiral higher amid turmoil in Libya, developing countries
across Asia are taking evasive action, shoring up their strategic
petroleum reserves against the risk of a prolonged supply shock. Their
actions could propel crude even higher.The Philippines, citing
events in the Middle East, announced on Wednesday that it would require
oil companies in the country to maintain 15 days of reserves, and
refineries to keep enough oil to last for 30 days.Manila’s move
is the most visible sign yet of how Asian countries are seeking to
improve their oil security amid what is shaping up to be the worst
supply crisis since the invasion of Iraq in 2003. Other big regional oil
importers are likely to follow suit.China is the world’s
second-largest oil importer after the US. India is the world’s
fifth-largest, ahead of countries such as South Korea, France and the
UK. But the pair lack a strategic petroleum reserve that can be tapped
during a supply crisis similar in size and scope to the ones held by
western countries.Unlike industrialised countries, which built
up their stockpiles three decades ago in the wake of the 1973 oil
crisis, China only recently began its strategic reserve programme,
starting to fill reserves in 2006 and completing a 102m barrel build-out
in “Phase One” two years later.The second phase of the programme will build a further 168m barrels of reserves by the beginning of next year.
When
China finishes filling its reserve, which it is expected to do by 2020,
it will hold about 500m barrels, equal to roughly three months of
imports and the second-largest stockpile in the world.China’s
strategic stockpiling “is likely to be a feature of the global oil
market not only this year but this decade”, says Soozhana Choi, head of
Asia commodities research at Deutsche Bank in Singapore.Although
purchases are kept secret, analysts and oil traders believe that events
in Libya and the prospect of further supply disruptions in the Middle
East could boost strategic buying of crude.“With
the expectation that prices are going to rise, they will accelerate the
pace of tank-filling,” says K.F. Yan, director at energy consultants
CERA in Beijing.
In other words, all of Asia thanks America's stupidity yet again, and specifially its service-based, oil hungry economy, which is about to proceed with the first of many fire sales of crude which will merely move from Point A (US) to Point B (somewhere in Asia).
Great work Obama. As always.
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Obama Fumbles with Gas Price Question
Car inventories are bloating, new union auto layoff's in the makings. Cough, July. Another SAAB story.
Thanks for that link Atom.....speaks just like someone you would meet dowm at the sinclair station talkin about how henessy was the bestissszz shit man...yo man can you spot me fi dolla's sooos I can get a couplea blunts and qauurt a Millas.
Where the hell are you DAVE CHAPPELLE
The oil will never leave USA.
Importing oil tankers will be diverted to China for the equivalent amount of oil.
Now, tell me that you don't recall that the USA needs cash. Tell me that you did not know that the IMF is forcing Greece to sell their assets.
Its starting to look a lot like Xmas (ops I mean Greece.)
jal
And the winner of the 30 million barrels of oil is.......China! They'll just deduct this as ''interest Expense" on the debt, as the US has been "a bit behind on its credit card payment at the BOC. And you thought Greece was having a fire sale.
Who do you think it was that bought all those puts Tuesday? Yahoo reported this yesterday:
http://www.reuters.com/article/2011/06/22/us-exxon-put-spread-idUSTRE75K...
Do you think the SEC even will look into it?
Are you convinced yet that all markets are rigged after today?
30 million barrels at 112 $ per
3.36 billion dollars
sounds like an interest payment
to china ...sans bernanke bucks
30 million barrels? I think he had a bet going in the last game and missed the putt.
The US share doesn't last the world until lunchtime.
30MM BOO is essentially nothing in respect to US demand, which is 19-20MM BOPD. It does nothing for anyone, anywhere. This is about as useful as Obama's new $50K/home mortgage assistance. O M G .
who gives a cunt anymore.. even if the dollar was replaced you would still have 5 years of dopes still using it in this country - fucking zombies
Has to be the best post of this thread DPS
even if the dollar was replaced you would still have 5 years of dopes still using it in this country - fucking zombies
thanx for the chuckle
cheers - next week will be 2 years for the both of us..when do we get parole?
The Kenyan needs fast cash so he sells the oil
Simple
After peak oil comes declining oil. Despair becomes panic.
Selling oil for cash in August. Hmmm, just when Timmy runs out of tricks to keep funding the government without raising the debt ceiling.
Delivering oil in August...taking moolah well before then, but what good will $3B do?
If your favorite creditor asked you for something that you had a pile of...and threatened to drop their bonds and reserves if you didn't capitulate...would it still be so silly to let some go?
If you knew that oil would be on the market for say...$60/bbl...within months...would it still be so silly to let some go?
You may be right on your thinking. I read a while back that the whole cash for clunkers thing was nothing more than a way to get a lot of scrap metal to send off to china. Why did they dump crap in the engines so that they could not run anymore? Could that have been an interest payment to china or a paydown of the debt? This is probably the same thing just a way to pay off a little of our debt to them because they dont want useless dollars anymore they want something of real value.
"Firesale" is right! I bought as much USO as I could afford even went on margin. This bargain basement price will not last long given wars, MENA revolutions, China's growth, etc.
GL!
Okay, who wants to confess for having voted for that guy from Texas that really made this largesse possible with constant SPR purchases?
Gordon Brown moment?
the US can now last a whole extra day before the debt ceiling becomes critical as this should raise $3 billion
crazy to think that your reserves are equal in value to 2 days of givernment deficits
Tyler,
I got here late and have not read the posts, but does anyone know if the oil is really in those salt domes?
The reason I ask is that about six years ago, I awoke from a dream in which I was being laughed at by everyone because I believed there was oil in the petroleum reserve and gold in ft knox----In the dream Iwas told: Bush one got the gold and bush two the oil.
This would be a great time to cover the shortfall in oil in the reserve----when someone is asking for an audit of the gold reserves-----
I'm late, tired, and without the energy to do more than ask this question as silly may be
thanks
I'm wondering why one is still able to trade oil on a retail and leveraged base?? I mean they killed XAU and XAG (at least for US residents) but they still offer OIL. Does anybody have some info about it?
This makes no sense and no one on this post can help me make sense of this. I am vexed.
Ok so we sell 30m barrels (a scam) for 100.00 per. We get 3,000,000,000 for the sale. Who gets the proceeds and where will it be used? Someone needs to follow the money.....do you think it will be used to buy down debt?
Just another drop in the sinkhole that is the general fund.
If the oil doesn't have to be paid for until the month following it's delivery, and if you can bid to "own", and if you can derivitize @ 100:1 and get away with it, and if you can get in on it while the prices are down to boot, heck.... hmmm? Who could do this and get away with it? I'd almost bet that this oil goes nowhere, but ends up costing U.S. Citizens twice it's current value, when we buy it back from GS or JPM.