LOOP storage auction lowers minimum bid level
Houston, 28 November (Argus) — The Louisiana Offshore Oil Port (LOOP) lowered the minimum bid price for LOOP Sour crude storage capacity offered in monthly online auctions hosted by Matrix Markets.
Bearish market conditions have compelled LOOP to accept bids as low as 5¢/bl starting with the next auction planned for 5 December, Matrix told Argus.
Previous LOOP auctions had a minimum bid of 15¢/bl, which has limited the event's success amid a backwardated Mars forward curve that has eliminated the economic incentive to storing crude oil for sale at a later date.
LOOP sold just 300,000 bl of the 8.05mn bl of storage space offered in the November auction, marking the third time the Matrix event failed to sell all capacity offered. A lower minimum bid level could encourage more market players to purchase short-term storage.
Decreasing demand for in-tank crude in the LOOP Sour caverns, coupled with variable LOOP Sour crude quality, pressured LOOP Sour crude to maintain a roughly 75¢/bl discount to Mars during the December trade month. LOOP Sour crude reached a record-high monthly spot trade volume as market participants cleared their inventory from the storage caverns.