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Friday, December 3, 2021

US to sell 32 million barrels from 4 sites as part of strategic sale

The United States will sell 32 million barrels of oil from four strategic oil reserve (SPR) sites that will be delivered between late December and April 2022, the Department of Energy (DOE) said, holding oil auctions to try to bring global prices down.

World oil prices are holding above $ 80 a barrel even after the administration of US President Joe Biden announced on Tuesday that it would free millions of barrels of oil from strategic reserves in coordination with the UK, China, India, South Korea and Japan.

However, traders said they expect the sale of SPR crude, which is basically a blend of sour or sour crude, will reduce the cost of high-sulfur grades in the US like Mars and Southern Green Canyon and benefit buyers in Asia. which processes mainly sour oil.

In the first coordinated release auction, about 10 million barrels will be available from Big Hill and Bryan Mound in Texas, about 7 million barrels from West Hackberry in Louisiana and another 5 million barrels from Bayou Choctaw in Louisiana, the Department of Energy said. your website.

Deliveries will run from January to April 2022, with early deliveries being accepted at the end of December.

Buyers will have to return the oil at a later date, between 2022 and 2024, the Energy Department said.

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Companies must submit bids on December 6th and contracts will be awarded no later than December 14th.

The grade, which was already priced at about minus $ 3.50 a barrel compared to WTI on Wednesday, is expected to continue to deteriorate.

South Korea is the leading buyer of Mars oil in Asia, while China buys the grade whenever an arbitration window opens.

WTI’s fast monthly spread has also turned into contango following the SPR announcement, making it economical for traders to transport oil over long distances as its value increases over time.

The Department of Energy will also announce the sale of up to 18 million barrels of SPR crude oil no earlier than December 17.

The winners of the regular, legally binding sale of 20 million barrels of oil in the United States are: Atlantic Trading & Marketing Inc., a division of the French company TotalEnergies, Chevron USA, ExxonMobil Oil Corp., Marathon Petroleum Supply and Trading, Motiva. Enterprises, Phillips 66 Co., Unipec America Inc. and Valero Marketing and Supply Co.

Authors: Florence Tan and Arathi San Nair

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