Biden Plans to Purchase 6M bbls of US Sour for SPRThe administration is now going out to tender, proposing to purchase 6 million bbls of US sour crude to replace some of the 220 million taken from the SPR, for delivery Oct 1 to Nov 30 2023.
This would be offshore USGC produced oil, already in high demand as there is not enough supply.
Medium sours are one of the types the US must import, needed desperately for refinery feedstock, while they must export half of all the light sweet WTI they produce, but the refineries can't use.
This repurchase would serve to tighten an already tight medium sour market, at a time when refiners will be scrambling to replace the lost Mexican medium sours, in addition to the 600 kbpd of heavy oil that will displaced by the TMX linefill and operation. Perhaps they are trying to front run these events now.
Medium and heavy sours now trade at a premium, while WTI trades at a discount. The naptha and fuel oil cracks at present tell the tale. You get Naptha as a residual from refining light sweet, and fuel oil from heavy or medium sours.
The US admin is now in a pickle, trying to replace the sours it released, and carefully not increasing gas prices in front of an election year. Well, good luck with these Bidenomics.
Will see if they actually award any of these contracts at all. Tenders to be in by July 19.
Got oil?
