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The tender of crude oil from the strategic petroleum reserve of the United States has attracted at least two foreign refiners as bidders, Bloomberg has reported, citing unnamed sources with knowledge on the matter.
The White House announced plans to release up to 50 million barrels of crude from the SPR in mid-November in its latest attempt to lower gasoline prices that were running at uncomfortably high levels. Although it initially prompted a price rally in oil, the announcement, which coincided with the news of the new coronavirus strain, did push prices lower, even though administration officials suggested they might delay the sale.
"I think each country will make decisions based on what's useful and good for their consumers and based on where the price is," Deputy Energy Secretary David Turk said last week, referring to similar adjustment decisions that U.S. allies taking part in the coordinated release of strategic oil reserves might choose to make amid lower prices.
The first part of the SPR release is for 32 million barrels of crude, which will be released on an exchange basis, meaning they would need to be returned to the strategic reserve in a few months. The rest of the 50 million barrels will, in fact, be an acceleration into the next several months of a sale of oil that Congress had previously authorized, the White House explained in November.
At the time the announcement was made, some energy experts warned that the move might have the opposite of the desired effect by prompting a response from OPEC+. This has not happened yet, but some other concerns have had to do with the actual buyer appetite in the SPR oil. According to experts, this is sour crude that refiners don't particularly like because its processing is more complex and costlier. Also, Bloomberg noted in its report, U.S. refiners every year face a year-end tax on their stocks, meaning they might be less willing to build these stocks right now.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.