REPOST: US surprises market with sale from SPR

Oil prices hit their lowest levels after the news of the test sale of Strategic Petroleum Reserve (SPR) broke out. Is this why the government's holding off the test sale? Read about it from this article.

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The US will hold the first test sale of crude from its emergency oil stockpile - Strategic Petroleum Reserve (SPR) – since 1990, offering a modest 5 million barrels in what some observers saw as a subtle message to Russia from the Obama administration.

The Energy Department said the test sale had been planned for months, timed to meet demand from refiners coming out of annual maintenance cycles. But oil traders noted that Russia’s effort to take over the Crimea region from Ukraine has prompted calls for use of booming US energy resources to relieve dependence on Russian natural gas by Europe and Ukraine.

 

Oil prices dipped to their lowest levels in a month after news of the test sale.

Officials said the release would ensure that oil stored in vast salt caverns could still reach local refiners affected by recent changes in pipeline infrastructure.

“Due to the recent dramatic increase in domestic crude oil production, significant changes in the system have occurred,” department spokesman Bill Gibbons said. The test sale was needed to “appropriately assess the system’s capabilities in the event of a disruption,” he added.

Surging US shale oil production has upended the logistics of US crude markets. Major pipelines that traditionally moved oil from the Gulf to the Midwest have reversed course, moving a glut of shale oil from places like North Dakota to points south.

Analysts say President Barack Obama has been more willing than his predecessors to tap the strategic reserve, noting that he did so in 2011 as part of an international response to civil war in Libya. While that 2011 sale was an emergency release, the Energy Department has said the latest sale is a test of the reserve’s operations. Many questioned whether the US SPR was large enough to send a meaningful political message to Russia, especially since US law still bans most exports of US crude oil. The SPR holds enough oil to cover US crude oil imports for about 80 days.

“It could be a message from Obama that says, ‘Russia, we can impact the price of oil if we want to.’ But I think that’s giving the administration too much credit at this stage,” said Dominick Chirichella, senior partner at Energy Management Institute in New York. Republican lawmakers concerned about Crimea have stepped up calls for the administration to approve natural gas exports more quickly to pressure Moscow. But a dearth of US terminals to export liquefied natural gas (LNG) means significant exports are years away, limiting the immediate use of gas as a geopolitical tool.

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Dr. Ali Ghalambor has more than 30 years of experience in the oil and gas industry. For more about him, and to read more news about the industry, visit this blog site.

REPOST: UPDATE 7-Brent oil rises, U.S. jobs, gasoline futures support

"Brent's premium to the U.S. benchmark widened back near $10 a barrel after narrowing to $7.94 on Wednesday, the tightest since Oct. 10." Read more about this news from this CNBC.com article:

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NEW YORK, Feb 7 (Reuters) - Brent crude oil rose by more than $1 to a one-week high on Friday on tighter North Sea supplies and rising heating oil and gasoline prices, which were supported by continued cold and a decline in the U.S. jobless rate.

U.S. oil also rose, but by less, pressured by the onset of U.S. refinery maintenance season that will curb demand for crude oil.

Persistently cold weather across the United States continued to fuel demand for heating oil while a declining U.S. jobless rate supported gasoline futures prices, said Oliver Sloup, director of managed futures with iitrader.com in Chicago.

"At the end of the day this has been an extraordinary winter. The cold weather is going to continue to support heating oil demand," he said.

Analysts said Brent was also supported by evidence that North Sea crude supply could be lower than expected in the next few months.

Brent crude oil futures were last trading $1.16 higher at $108.35 at 11:47 a.m. EST (1647 GMT). The contract breached the 200-day moving average of $107.89 for the first time in five sessions.

U.S. crude was up 43 cents at $98.27, after trading at a low of $97.11. The contract made a solid run above the 100-day moving average of $97.69.

Brent's premium to the U.S. benchmark <CL-LCO1=R> widened back near $10 a barrel after narrowing to $7.94 on Wednesday, the tightest since Oct. 10.

U.S. heating oil futures were trading 1.4 percent higher at $3.0362 per gallon. U.S. gasoline futures were up 1.5 percent at $2.7237.

The U.S. unemployment rate hit a new five-year low of 6.6 percent in January, down from 6.7 percent in December, the Labor Department said. U.S. nonfarm payrolls rose only 113,000, a lower-than-expected gain that initially forced oil prices lower.

Gains in U.S. crude on the jobs report were capped as refiners entered maintenance season, which will cut demand for oil.

Citgo Petroleum Corp began a shutdown of both plants at its refinery in Corpus Christi, Texas on Wednesday and Motiva Enterprises LLC said it began maintenance at its 235,000 barrel-per-day refinery in Convent, Louisiana, on Thursday.

The market was keeping a wary eye on Saturday's talks between Iran and the United Nations' International Atomic Energy Agency in Tehran.

The U.N. nuclear watchdog hopes to persuade the Islamic state to start addressing long-held suspicions it has worked on designing a nuclear bomb.

Tough international sanctions over the past two years have cut Iran's oil exports in half.

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REPOST: Oil futures fall below $96 on ample U.S. supply

Status of supplies of crude in US has been affecting the prices of crude oil per barrel. Read more from this MarketWatch.com article:

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NEW YORK (MarketWatch) — Oil futures dropped below $96 a barrel on Friday, as ample U.S. supplies of crude continued to put downward pressure on prices.

Crude oil for December delivery CLZ3 -0.92%  fell 77 cents, or 0.8%, to $95.61 a barrel in electronic trading on the New York Mercantile Exchange.

The contract declined 0.4% on Thursday. Compared with the close of $102.33 a barrel for the front-month contract at the end of September, prices lost 5.8% for October.

The broader slide has come as stockpiles have risen for six weeks in a row, according to the U.S. Energy Information Administration. In its latest report, issued Wednesday, it said crude supplies rose 4.1 million barrels in the week ended Oct. 25. Analysts polled by Platts expected a climb of 3.5 million barrels.

The decline in U.S. oil futures is good news for consumers since it should depress gasoline prices at the pump.Read: Goodbye, $100 oil. Hello, $3 gasoline.

December Brent crude UK:LCOZ3 -1.47% , the European benchmark, fell $1.24, or 1.2%, to $107.60 a barrel on Friday on ICE Futures. The gap between Nymex and Brent crude prices is around $12 a barrel, with Brent getting a boost from ongoing supply outages in Libya.

While Nymex crude prices continued “to be weighed down by higher refinery maintenance in the U.S. and the associated build in crude stocks seen there in the last two weeks, the Libyan supply situation is rather more bullish on the other side of the Atlantic,” wrote analysts at JBC Energy GmbH. “With supply decimated, the Libyan government’s latest efforts to find a solution for the problems have so far been met with indifference.”

In the corporate sector, oil major Chevron Corp. CVX -0.59%  reported a decline in third-quarter profit primarily due to lower margins for refined products. 

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