The auction of oil from the Strategic Petroleum Reserve brought in $3.28 billion of bids, an average of $107.19 a barrel, according to a list of the winning bidders. The price of New YorkMercantile Exchange’s benchmark crude, West Texas Intermediate, fell 48 cents to $94.94 a barrel Friday. On Thursday,WTI closed a penny above the level it was the day before Obama’s announcement. The price of the more widely used Brent grade of crude oil in London fell 71 cents to $111.77 a barrel on Thursday.
The Center opposed the drawdown from the SPR because it was to influence the price of gasoline at the pump instead of addressing a national oil disruption emergency. Moreover, crude oil prices on futures markets had already begun to drop to levels that preceded President Obama’s announcement of a drawdown from reserves. We also do not believe that the drawdown will influence prices. The U.S. uses about 20 billion barrels of oil every day and about half of that comes from imports. So the U.S. release represents about one and a half days of total oil use.
According to an Energy Department table, Valero, the nation’s biggest independent oil refiner, won the largest chunk in the auction, purchasing 6.9 million barrels, or 22.5 percent of the total. Other winning bids went to major oil refiners and oil trading firms, including Shell’s U.S. trading arm and Geneva-based Vitol. Barclays and J.P. Morgan Chase also submitted winning bids.
Obama ordered the release of 30 million barrels of oil from the reserves, an amount to be matched by other members of the International Energy Agency in an effort to tamp down prices and offset production lost as a result of fighting in Libya. But the IEA has since announced that 20 million barrels will be “released” by lowering requirements for commercial stockpiles. The total sales from government inventories would be at most 39 million barrels. (Wash Post, 7/2/2011)