US to sell another 10mn bl from SPR

  • Market: Crude oil
  • 09/19/22

President Joe Biden's administration plans to continue an emergency drawdown of crude from the US Strategic Petroleum Reserve (SPR) into November, with the sale of an additional 10mn bl of sweet crude.

The crude sale is the latest in a series of sales supporting Biden's decision in late March to withdraw 1mn b/d from the SPR over six months as a "wartime bridge" tied to disruptions caused by Russia's invasion of Ukraine. The sale will put the US on track to withdraw 165mn bl of crude out of the 180mn bl that Biden approved earlier this year, the US Energy Department said.

The upcoming sale will offer up to 5mn bl of sweet crude from the Big Hill SPR site in Texas for delivery on 1-30 November. It will also offer up to 5mn bl of sweet crude from the West Hackberry SPR site in Louisiana for delivery on 1-20 November. Bids are due at 11 am ET on 27 September.

The SPR held 427.2mn bl of sweet and sour crude as of 16 September, the lowest volume in nearly four decades. The White House says the drawdown has lowered domestic gasoline prices by up to 38¢/USG and helped ease inflation, but critics say the release of crude from the reserve has been part of a strategy to ease consumers' pain at the pump in the run-up to the midterm elections on 8 November.

"He's using that to keep prices down as much as he can just before the election," former president Donald Trump said at a rally in Ohio on 17 September. "And right after the election, it's going to double up and go higher than anybody ever believed."

Democratic lawmakers up for election in vulnerable seats have been pushing Biden to continue the drawdown from the SPR, which they say will provide price stability for consumers and avoid a potential spike in prices after existing crude sales wind down in late October. US regular grade gasoline prices have dropped about $1.30/USG over the last three months, according to the US Energy Information Administration.

"We urge your administration to commit to releasing additional barrels of oil from the SPR through the end of this year, at a minimum," US representative Jared Golden (D-Maine) and seven other lawmakers in the US House of Representatives wrote to Biden on 16 September.

Since Biden took office, the administration has withdrawn nearly 211mn bl of crude from the SPR. Of that, 55mn bl was sold through mandatory sales required by the US Congress. The other withdrawals have come from the 1mn b/d emergency sales and a temporary loan program that will automatically return more than 20mn bl of crude to the SPR in 2024.

The US Energy Department intends to use the billions of dollars it has collected from the emergency crude sales to buy crude to refill the SPR, potentially through new fixed price contracts. The agency does not expect to begin refilling the SPR until "well into the future" and likely after the upcoming fiscal year ends on 30 September 2023, the White House said last week.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
03/01/24

TMX crude linefill starts in April, May: MEG

TMX crude linefill starts in April, May: MEG

Calgary, 1 March (Argus) — The operator of the Trans Mountain Expansion (TMX) in western Canada is calling for a combined 4.2mn bl of crude from shippers starting next month as it prepares to fill the new pipeline, according to producer MEG Energy. Canada's 590,000 b/d TMX pipeline yesterday made a call for 2.1mn bl of linefill in April and another 2.1mn bl in May, said MEG Energy's chief executive Derek Evans today. The combined volume represents almost all of the 4.4mn bl line fill Trans Mountain had previously said it needed for its expansion project. "We see this as incredibly positive," said Evans today. "Good news for not only us, but really everybody in the heavy oil business. That incremental egress will substantially reduce that [heavy crude] differential." Heavy crude producer MEG is a committed shipper on TMX and plans to move 20,000 b/d on the line connecting Edmonton, Alberta, to Burnaby, British Columbia. The now C$34bn ($25bn) project has been mired in construction and regulatory delays, but has only one small section in British Columbia left to finish. Trans Mountain plans by 4 March to start installing the last section of pipe in a tunnel about 100 kilometres east of Vancouver and said this week it intends on starting operations in the second quarter of this year. TMX and the existing Trans Mountain system will combine for 890,000 b/d of capacity for Albertan oil producers to the west coast. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Read More
News

US launches probe into Chinese auto imports


02/29/24
News
02/29/24

US launches probe into Chinese auto imports

Washington, 29 February (Argus) — President Joe Biden has ordered an investigation that could lead to new limits on vehicles made in China, citing concerns about national security and the potential for low-cost imports to dominate the auto market. The investigation, led by the US Commerce Department, will look into alleged national security concerns from the technology in imported Chinese cars and trucks. The technology in those vehicles could collect sensitive data on drivers and domestic infrastructure, Biden said, in addition to giving Beijing the ability to remotely access or disable vehicles. Biden also cited the economic importance of the auto sector to the US, along with Chinese restrictions on importing foreign vehicles, as the basis for the investigation. Biden has heavily promoted the auto sector's transition toward electric vehicles through federal funds for charging infrastructure, expansive tax credits and tougher tailpipe standards. "China's policies could flood our market with its vehicles, posing risks to our national security," Biden said. "I'm not going to let that happen on my watch." US automakers have warned that low-cost auto imports from China — Chinese automaker BYD this month said it was releasing an electric vehicle priced at $14,000 — could undermine their investments in electric vehicles. The Inflation Reduction Act offers billions of dollars in federal tax credits for investments in auto manufacturing, along with a tax credit of up to $7,500 per electric vehicle that is made in the US. Low-cost Chinese auto imports could be an "extinction-level event for the US auto sector," the industry group the Alliance for American Manufacturing said in a report last week. The group called for added tariffs on vehicles made in China, which it says are being manufactured at low prices through "heavy state support." The US already places a 25pc tariff on imports of vehicles manufactured in China, in addition to a 2.5pc tariff on all auto imports. The Commerce Department said it would issue an advance notice of proposed rulemaking that would look at national security risks of "connected" technology in vehicles. It does not take a "lot of imagination" to understand how governments with access to connected cars and trucks could pose national security or privacy risks, US commerce secretary Gina Raimondo said. China's embassy did not immediately respond to a request for comment. China's commerce ministry has vowed to support its electric vehicle sector and recently issued guidelines intended to promote trade of those vehicles. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Vertex plans Mobile refinery turnaround in March


02/28/24
News
02/28/24

Vertex plans Mobile refinery turnaround in March

Houston, 28 February (Argus) — Specialty refiner Vertex Energy is planning a turnaround at its 88,000 b/d Mobile, Alabama, refinery in March as it prepares to run at full rates during the driving season. The turnaround includes a catalyst change for the plant's catalytic reforming unit and maintenance on its crude distillation unit (CDU), the company said on an earnings call today. Vertex did not give a time line for the work but said it aims to run the refinery at full rates by peak summer demand season, which starts on Memorial Day weekend in late May. The company plans to run throughputs of 60,000-63,000 b/d at the Mobile plant's conventional fuel refining operations in the first quarter and run its renewable diesel units at 3,000-5,000 b/d. Vertex processed 71,000 b/d at the Mobile refinery in the first quarter of 2023, prior to starting the plant's renewable feedstock units. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

PdV restarts MTBE plant for domestic supply


02/27/24
News
02/27/24

PdV restarts MTBE plant for domestic supply

Caracas, 27 February (Argus) — Venezuelan state-owned oil firm PdV has restarted a unit that produces MTBE at its Jose complex in Anzoategui state for the first time in five years, the company said. The oxygenate will be used "to optimize the octane rating of the gasoline distributed in Venezuela," PdV president and energy minister Pedro Tellechea said on social media on Monday. Years of underinvestment in refinery maintenance in Venezuela has led to periodic gasoline shortages. The Super Octanos unit, with a nameplate capacity of 600,000 t/yr, had produced MTBE only for the domestic market for many years. It stopped operations after former US president Donald Trump began imposing comprehensive sanctions on Venezuela's oil industry five years ago, which also cut off imports of MTBE from the US. Venezuela imported 562,750 metric tons (t) of MTBE from the US in 2014, but this fell to 30,703 t in 2019 before the flow dried up because of the sanctions in 2020 . By Carlos Camacho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Brazil boosts foreign spending in energy transition


02/27/24
News
02/27/24

Brazil boosts foreign spending in energy transition

Sao Paulo, 27 February (Argus) — Brazil's climate fund and green transition plan received multi-billion monetary commitments from multilateral agencies during the G20 meetings, as part of government efforts to boost foreign investment in decarbonization. Brazil estimates that only 6pc of funding for its energy transition projects comes from the private sector, compared with an average of 14pc in other emerging markets and 81pc in developed countries. The high cost of long-term currency hedge contracts has contributed to the limited participation of foreign investors in Brazil's energy transition, the president of the Inter-American Development Bank (IDB) and former president of Brazil's central bank Ilan Goldfajn said. To ease the entry of foreign investments, the government launched the Eco Invest Brasil program, which will create currency hedge mechanisms to limit exposure to exchange-rate volatility. Brazil's finance ministry and central bank developed the program with the World Bank and IDB. The IDB has committed a total of $5.4bn to get the Eco Invest program started, including $3.4bn for currency swaps and $2bn for lines of credit. IDB will also help Brazil prepare and structure projects to receive financing. The plan seeks to remove obstacles for foreigners to invest in Brazil's energy transition by reducing risks related to the volatility of the Brazilian real, according to the treasury secretary Rogerio Ceron. As part of the program, the government plans to issue a presidential decree that will create four new lines of credit within the Climate fund. The goal of the plan is to expand Brazil's integration with the international financial system and boost foreign investment in companies and projects that decarbonize the economy. Brazil's Bndes development bank also reached an agreement with the Glasgow Financial Alliance for Net Zero (GFANZ) to expand financing for Brazilian decarbonization projects. IDB will also provide an additional $2bn line of credit and technical support for Brazil's Climate fund, while the World Bank is considering allocating up to $1bn to the fund. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.