US Releases 500,000 Barrels Of Oil From Strategic Reserve As Largest US Refinery May Be Shut For 2 Weeks

Tyler Durden's picture

The U.S. Energy Department announced on Thursday that it would release 500,000 barrels of crude oil from the US Strategic Petroleum Reserve as a result of the disruption to the US petroleum industry following Hurricane Harvey amid fears of a surge in motor fuel prices, which have been compounded by the previously reported shuttering of the Colonial pipeline. According to the DOE statement, the oil will be delivered to the Phillips 66 refinery in Lake Charles, Louisiana, a plant which has not been affected by the storm.

According to Reuters, the release - the first emergency release from the reserve since 2012 - will include 200,000 barrels of sweet crude and 300,000 barrels of sour crude oil. It was an exchange agreement, meaning the government will loan crude to Phillips 66, which is required to replace the reserve’s oil at a later date.

The Energy Department “will continue to provide assistance as deemed necessary, and will continue to review incoming requests for SPR crude oil,” spokeswoman Jess Szymanski said.

The reserve, a legacy from the 1970s Arab oil embargo which caused panic over fuel supply, currently contains 679 million barrels of oil. It is a small release of crude for a country that uses nearly 20 million barrels of petroleum daily.

Furthermore, it is unclear what if any benefit the SPR release will do to surging gasoline prices, as the bottleneck is not oil supply but rather refining capacity: as of this moment roughly 20% of US refining is offline as a result of Harvey. As we reported this morning, gasoline prices surged in morning trade after the Colonial Pipeline which operates the biggest U.S. fuel transport system, said it would shut its main lines to the Northeast amid outages at pumping points and lack of supply from refiners.

Separately, and confirming that the gasoline price spike may last longer than initially expected, moments ago Reuters reported that Motiva Enterprises' Port Arthur, Texas refinery, the largest in the US, may be shut as long as two weeks for assessment of the plant and repair of any damage, sources familiar with plant operations said on Thursday. The 603,000 barrel per day (bpd) Port Arthur Refinery was shut on Wednesday due to flooding from Tropical Storm Harvey.

And while gasoline has soared to 2 year highs as shown earlier...

 

 

... it now appears that the euphoria has also shifted to oil, which moments ago spiked sharply higher, even if the catalyst for the move was not initially clear.

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order66's picture

Really great to see countries around the globe stepping up to help out the U.S. during a major crisis.

Oh....wait.

robertsgt40's picture

Trump can "release" all he wants. There's still a glut. 

ArkansasAngie's picture

Its a gasoline issue not a crude.

 

What a bunch of BS

ThaBigPerm's picture

So is the SPR oil in the front of, or back of, the long-ass queue forming in the gulf waiting for refining capacity to come back online?

Mr 9x19's picture

don't fear the rise , because it will, rise.

 

anytime a strategic stock is used as buffer. oil station make a 40% raise in price. so it is a win win...

 

happened in france last year...

The Cooler King's picture

On Monday, I filled up both tanks of my Truck (32 gallons), plus, another 40 gallons (8 5 gallon containers) and paid $2.15 a gallon at COSTCO

 

Today it's $2.30 a gallon

CheapBastard's picture

Food trucks, USPS trucks, etc are not moving because they can't get gas.

rejected's picture

Where? The Post Offoce? Hell, its only been a couple of days.

The_Juggernaut's picture

Yeah, I'm not getting how more crude helps with a refinery shortage.

Swampster's picture

More Oil + LESS REFINERIES =  WTF????...

 

SOUNDS LIKE MOAR 'NAZI JEW MEDIA PROPAGANDA FOR THE STOOPID!

UndertheDRADIS's picture

Probably equals tankers stuck in holding orbits around the Gulf Coast. The US doesn't tend to license new refineries because it makes the commies unhappy, so the ones in place just get bigger and bigger.

rejected's picture

Wait... Those fine people called Americans who only want to help each other during emergencies will probably raise the prices another 50 cents to a dollar.  Remember the song, Smilin Faces......

VoteSmarts's picture

Snark noted; it's all about perspective.

pods's picture

That was my thought as well. They have oil, they need refining capacity. 

Just another dumb move to placate Wall Street. And a tiny move at that. 

This might be worse than doing nothing, as the majority is sour crude anyways!

pods

The Cooler King's picture

Between 1998 - 2015 they didn't open any new refineries in the US. Since then, 5 have been built.

 

Take a look where ~~~

 

https://www.eia.gov/tools/faqs/faq.php?id=29&t=6

Bastiat's picture

If you read the article, even the first few short paragraphs, you would know that they are releasing the crude to particilar refinery.  It is likely the case that crude is not getting to that refinery.  Those tankers are out in the Gulf because they can't unload.

tenpanhandle's picture

What?  There is an article below the headline?

runnymede's picture

Many refineries transitioned to sour over the years and got really good at it. That's why the sweet-sour spread narrowed. 

Got a family member in the biz. 

Blazing in BC's picture

What???? Oil and gas prices are not related?

Serfs Up's picture

"Its a gasoline issue not a crude."

 

^^^this^^^

tmosley's picture

>Furthermore, it is unclear what if any benefit the SPR release will do to surging gasoline prices, as the bottleneck is not oil supply but rather refining capacity

Yeah, no shit. What a dumbfuck thing to do. Already a fucking oil glut.

bluskyes's picture

Amerika refuses help from other countries.

cheech_wizard's picture

It doesn't surprise me that you are ignorant, and that you show that ignorance on a daily basis.

13 hours ago - https://www.reuters.com/article/us-storm-harvey-mexico-red-cross-idUSKCN...

3 hours ago - https://www.vallartadaily.com/news/mexico/mexico-red-cross-houston/

Mexico’s Red Cross sent an envoy of volunteers to storm-devastated Houston on Wednesday, hours after Texas governor Greg Abbott said the state accepted an offer of aid from the Mexican government, including vehicles, boats, supplies and food.

Standard Disclaimer: Now try spending an entire day without showing your ignorance, you'll be glad you did.


 

Dorado's picture

Ok, so what does releasing barrels of oil do to help with the issue of REFINERIES being shut?  Who is going to crack that oil into distillates?  Something is missing in this story.

NoDebt's picture

You ask too many questions.  Just accept that this is good and big brother is always there for you.

(I was wondering the exact same thing.  Green arrow.)

 

 

 

LetThemEatRand's picture

I doubt there's anything missing in the story.  Probably just a political move to make it look like they are doing something to help "ordinary Americans."  

cheech_wizard's picture

Jimmy will crack that oil, just as soon as he get's done cracking that corn.

Ask a stupid question, by now you should expect a stupid answer.

 

 

runnymede's picture

Symbolic gesture that .gov is doing something. 95% lack critical thinking skills to know the difference. 

 

Uncertain T's picture

Gas prices spike .25 in South Carolina.

bluskyes's picture

In what form is the reserve? Diesel fuel, and gasoline?

Why does it not seem to make sense to be releasing oil when the refineries are not operational?

NoDebt's picture

It's in the form of used french fry oil.

 

Two Theives and a Liar's picture

Yeah the gouge is on! +25 or so here in the NY Metro area. My understanding is that refined gasoline supplies are still high in this area (like nothing is stored in those GIANT tank farms in NJ). But of course not many really undertsand the energy business. 

kavabanga's picture

WTI Crude Oil Forecast August 31th 2017 

Highlights of Fundamental And Latest News 

Crude oilprices were narrowly mixed in Asia on Thursday as sentiment was underpinned regionally by China’s official manufacturing PMI, though the market is now largely driven by the stoppages and damaged caused by Hurricane Harvey along the U.S. Gulf Coast. 

Yesterday’s EIA Data could not help CRUDE OIL prices to move higher and price dropped and tested the important support level . 

The current price of Crude Oil is 46.10. 

45.40 is an important support and we will pay attention to this support. Break below of this support will trigger the downward movement. 

Daily ATR is 110 pips. Price is below MA 50 and MA 20 and Daily MA Resistance is 46.95 . 

Price can test this resistance and we will use this as a SELL opportunity. 

On H4 chart : 

Crude Price is testing H4 resistances of both MA 12 AND Fibonacci. Above this level 46.48 and 46.95 are the resistance levels. 

Summary : If you do not have any SHORT trade on CRUDE OIL you can leave pending SELL orders to 46.48 and 46.92 with SL 47.70. The first target is 45.40 and second target is 44.50. 

https://www.tradingview.com/chart/USOIL/S1lbRANz-WTI-Crude-Oil-Forecast-...

EmeraldWI's picture

It's the  $100+ oil GW bought from his buddies. Making room for $200 oil.

Pigeon's picture

Correction. It's the $100 oil that Goldman manufactured through futures chicanery.

EmeraldWI's picture

Sure, blame the capitalists for trying. Didn't Suze Orman tell you to build a commodities basket?

Pigeon's picture

I have no problem with capitalism. But that is NOT what has been practiced the last 10 years. Your watching Suze Orman explains a lot about your comment.

There is a big difference between capitalists and RENT-SEEKERS and GAME-RIGGERS.

shizzledizzle's picture

Awesome! That's gotta be at least 1/3rd of a days supply for the east cost. 

roadhazard's picture

If the refineries aren't working releasing oil means nothing. Plus the gas pipeline to the South East has been shut down as of today.

mayhem_korner's picture

Bingo.  But the masses don't understand that.  The SPR will never really be "strategic"until the stores are refined products.

onthedeschutes's picture

Not to worry...Wells Fargo just opened up (created) a dozen refineries over the weekend. 

youngman's picture

Typical dumb government response..I bet some dumb government employee thinks the oil in the reserve is ready to put into your car..to them oil is gas....they have no clue...

Cautiously Pessimistic's picture
The nine most terrifying words in the English language are, 'I'm from the government and I'm here to help'.  ~  Ron Reagan
Blazing in BC's picture

Bike couriers will do well

jmack's picture

Good thing regulations make it so hard to build new, or small, refineries, so that everything has become centralized  and made our infrastructure more fragile to localized weather events.....

 

      But of course all the regulation nazis' never address this aspect of regulation.

Pigeon's picture

This is why wind and solar are so important! 

Heh heh heh heh. Elon asked me to post that.

dark pools of soros's picture

drive a volt and dont give a fuck either way