Tag Archive for: uscrude

The US will continue buying crude at $70s per barrel or lower and plans to add millions of barrels to the SPR early next year.

SPR – US set to slowly refill SPR as crude buys extend into 2025

The United States will continue to buy crude when prices are in the $70s a barrel or lower and plans to add several million barrels of crude to the Strategic Petroleum Reserve (SPR) early next year.

The U.S. Department of Energy (DOE) is continuing its efforts to bolster the depleted SPR with new oil purchases. DOE’s Office of Petroleum Reserves has recently announced a call for bids to supply up to 1.5 million barrels of oil to the Bayou Choctaw site in January 2025. An additional solicitation will follow on August 12, 2024, for another 2 million barrels destined for the Bryan Mound site, also for delivery in January 2025.

This move is part of a strategic plan to replenish the SPR while taking advantage of favorable oil prices.

The DOE’s stated goal is to buy crude oil at or below $79 per barrel.

The replenishment strategy comes in the wake of the SPR’s critical role in stabilizing the market during global supply disruptions, notably the release of more than 180 million barrels of oil from the SPR starting in 2021, as gasoline prices remained high. The Department of Treasury claims that these releases, along with coordinated international efforts, helped reduce gasoline prices by up to 40 cents per gallon in 2022.

The SPR currently houses 375 million barrels of crude—a figure that is 263 million barrels less than oil in the SPR at the beginning of President Joe Biden’s term in office. The SPR, capable of storing as many as 714 million barrels of crude oil, is kept in underground salt caverns at four sites in Texas and Louisiana and was designed to protect the economy and American livelihoods during oil shortages.

In June, U.S. Secretary of Energy Jennifer Granholm told Reuters in an interview that the Administration could accelerate the pace of buying crude to refill the SPR, as all four sites would be available by the end of the year after a maintenance period.

“All four sites will be back up by the end of the year, so one could imagine that pace would pick up, depending on the market,” Secretary Granholm said, commenting on the current pace of buying about 3 million barrels of crude for the reserve per month this year.

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Source: Oil Price

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US crude oil rallies

US crude oil rallies more than 4%, tops $80 as Pentagon sends more forces to Middle East

US crude oil rallies Monday to top $80 per barrel as the Pentagon dispatched more forces to the Middle East in anticipation of an Iranian attack on Israel.

Defense Secretary Lloyd Austin ordered a carrier strike group, including F-35 warplanes, to accelerate its deployment to the region. Austin also ordered a guided-missile submarine to the Middle East.

Israel has put its military on high alert, a person familiar with the matter told The Wall Street Journal.

“We see allocations to oil and gold as the main means to add some protection to portfolios. It is  against a further escalation in geopolitical tensions,” UBS analysts told clients in a Monday research note.

U.S. crude oil is trading higher even as OPEC lowered its global demand growth forecast by 135,000 barrels per day.  This is citing softening consumption in China.

“The oil markets reacted strongly to the increased geopolitical risk even as OPEC has shown some concern about its demand growth”. This is what Phil Flynn said. Hi is the senior market analyst at the Price Futures Group. He said the market is still on track for a deficit as inventories fall.

U.S. crude oil finished last week more than 4% higher, snapping a 4-week decline, as the stock market recovered most of its losses from a flash sell-off caused by mounting fear of a recession and after the Bank of Japan lifted interest rates a fraction.

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Source: CNBC

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supply concerns

Supply concerns and demand optimism are boosting oil prices

Oil prices surged this week as hurricane season began, demand improved, and both U.S. crude and gasoline inventories fell. This triggers supply concerns. Rising geopolitical risk around the world only added to bullish sentiment.

Friday, June 21, 2024

The onset of hurricane season in the US is improving demand figures. It is corroborated by shrinking crude and product inventories. It is becoming more visible Chinese buying have come together to lift oil prices to their highest since early May. The market was also reminded of the dysfunctional Red Sea navigation with the Houthis sinking another bulker this week, adding upward pressure to oil prices.

Chevron-Hess Merger Stalled by Arbitrage Delays.

Three months have passed since the case for a contract arbitration panel on Chevron’s planned takeover of Hess’ Guyana assets was filed. Still, there is no final arbitrator selected, delaying the $53 billion merger.

Alberto Becomes the New Scare for the Gulf. 

A storm system has made landfall in Mexico’s northeast regions. It is becoming the first named tropical storm of the 2024 Atlantic hurricane season, with Tropical Storm Alberto bringing heavy rains that disrupted lightering operations in Corpus Christi and Beaumont.

Here Comes the New PE-Backed Gas Giant.

US private equity giant Carlyle Group (NASDAQ:CG) will form a new Mediterranean-focused oil and gas company after purchasing Energean’s (LON:ENOG) assets in Italy, Croatia, and Egypt for $945 million, naming former BP boss Tony Hayward as its new CEO.

Europe Approves 14th Russia Sanctions Package.

The European Union approved a 14th package of sanctions against Russia that bans re-exports of Russian LNG in the EU, however steering clear of banning LNG imports per se, whilst also blocking any financing for Russia’s planned Arctic and Baltic LNG terminals.

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Source: Oil Price

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Last week, US crude inventories posted an unexpected rise, with the API reporting a build of 4.91 million barrels.

Oil demand likely to surprise to the upside

Oil prices have recorded the biggest weekly decline in three months thanks in large part to challenging economic indicators and growing demand concerns. Last week, U.S. crude inventories posted an unexpected rise, with the American Petroleum Institute (API) reporting a build of 4.91 million barrels, a sharp contrast from the anticipated decrease of 1.1 million barrels. This build has come after reports that U.S. crude production surged to 13.15 million barrels per day in February, up from 12.58 million barrels in January, suggesting supply is outpacing demand.

But it’s not just bearish crude oil metrics driving the oil price decline. The EIA has provided an initial estimate that U.S. gasoline demand declined 4.4% Y/Y in April, a negative sign for oil bulls that has triggered a rapid pivot by speculative funds towards the short side of the market. However, commodity analysts at Standard Chartered have argued that the demand pessimism is overblown. According to StanChart, there appears to be a systemic downwards bias in the weekly estimates of U.S. fuel demand, with actual gasoline demand exceeding estimates in 22 of the past 24 months, while distillate demand (mainly diesel) has been revised higher in all of the past 24 months. The analysts point out that last September, the EIA put gasoline demand at 8.014 million barrels per day (mb/d), a stark contrast from the 9.465 mb/d recorded for in September 2022. Across the whole month, the EIA data implied a y/y demand drop of 5.6%, eliciting talks of demand destruction with some experts contending that demand was at its weakest since 1999. However, it later turned out that actual gasoline demand only fell 0.4% Y/Y, far milder than the EIA estimate of a 5.6% decline. StanChart believes the EIA’s estimate for April gasoline demand is too low with actual demand likely to be surprise to the upside.

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Source: Oil & Gas 360

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