Nov 25 (Reuters) - The United States will sell 32 million
barrels of crude from four Strategic Petroleum Reserve (SPR)
sites to be delivered between late-December and April 2022, the
Department of Energy (DOE) said as it auctions oil to try to
lower global prices.
International oil prices have held above $80 a barrel
even after U.S. President Joe Biden's administration
announced on Tuesday it will release millions of barrels of oil
from strategic reserves https://www.reuters.com/markets/commodities/us-set-unveil-emergency-oil-release-bid-fight-high-prices-2021-11-23
in coordination with Britain, China, India, South Korea and
However, traders said they expected the sale of SPR oil,
which is mainly blended sour, or high-sulfur, crude, will
depress the value of U.S. sour crude grades, such as Mars and
Southern Green Canyon, and benefit buyers in Asia, which
processes mainly high-sulfur oil.
In the first auction of the coordinated release, about 10
million barrels will be made 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 DOE said on its website.
Deliveries will take place January through April 2022, with
early deliveries accepted in late December, it added.
Buyers will have to return the oil at later dates between
2022 and 2024, the DOE said.
Companies are required to submit bids on Dec. 6 and
contracts will be awarded no later than Dec. 14.
JBC Energy analyst Viktor Katona said spread over four
months, the release equated to a steady 270,000 barrels per day
stream of medium sour grades providing direct competition to
The quality of crude to be released will have API gravity of
31 to 33 degrees, Katona said, adding it was "very good news"
for Asian buyers of Mars.
The grade, already valued at around minus $3.50 per barrel
versus WTI on Wednesday, is expected to weaken further.
South Korea is a leading buyer of Mars crude in Asia while
China has purchased the grade whenever the arbitrage window is
The prompt WTI monthly spread <CLc1-CLc2> has also flipped
into contango after the SPR announcement, which makes it
economic for traders to ship the oil over long distances as its
value increases over time.
The DOE will also announce the sale for up to 18 million
barrels of SPR crude no sooner than Dec. 17.
The winners of a regular, legally required U.S. SPR sale in
September of 20 million barrels of crude were: Atlantic Trading
& Marketing Inc, an arm of 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.
(Reporting by Florence Tan and Arathy Nair; editing by
Uttaresh.V and Barbara Lewis)