US delays return of 8mn bl of crude to SPR

Spanish Market: Crude oil
16/03/23

President Joe Biden's administration has delayed by roughly a year the return of more than 8mn bl of crude borrowed from the US Strategic Petroleum Reserve (SPR).

The delays were approved as recently as last week, when the US Energy Department revised two "exchange" contracts it negotiated with Shell, delaying the return of 3.6mn bl of crude to the SPR until 2025. The administration last year separately revised four other contracts, delaying the return of nearly 4.5mn bl of crude initially planned to be returned to the SPR from 2022-24.

The contract revisions, obtained through the Freedom of Information Act, appear at odds with remarks by US energy secretary Jennifer Granholm, who earlier this year said the administration wants to "accelerate" the return of crude exchanges as part of a three-part strategy to partially refill the SPR. With 371.6mn bl of crude in inventory, the reserve is currently at its lowest level in nearly 40 years.

One part of the administration's strategy to refill the SPR "is to accelerate some of the exchanges that were announced before to get those back in," Granholm told reporters at the White House on 23 January.

Oil companies and traders borrowed more than 27.4mn bl of crude from the SPR between September 2021 and June 2022, most under a program Biden created in hopes of bringing down gasoline prices. Under the initial contracts, companies were required to return most of the crude by 2024, along with an in-kind "premium" set at 2.3-14.6pc of the volume they borrowed.

But rather than "accelerate" the return of oil to the SPR, the Energy Department has repeatedly sought to delay the return of crude, according to nearly two dozen contracts and contract modifications obtained by Argus under public records requests.

The Energy Department failed to respond to repeated requests for clarification on Granholm's remarks.

The Energy Department renegotiated three of the exchange contracts in February 2022, in the weeks before Russia's invasion of Ukraine caused global oil prices to rise. Contract revisions for ExxonMobil and TotalEnergies delayed the return of 3.5mn bl of crude that was set to be returned that year. ExxonMobil declined to comment. TotalEnergies did not respond to a request for comment.

The Energy Department followed up in August by revising another exchange contract with Chevron that delayed by more than a year the return of 939,000 bl that had been scheduled for this September. The final contract revision, reached with Shell on 8 March, delayed the return of 3.6mn bl of crude by 11 months until July to August of 2025. Neither company responded to a request for comment.

The 8mn bl remains relatively small compared with the 180mn bl of crude withdrawn from the SPR last year as part of emergency sales, or an upcoming 26mn bl drawdown scheduled for delivery on 1 April-30 June. Republicans have criticized the SPR drawdowns and question whether the administration has a cohesive plan to refill the emergency stocks.

The SPR could be refilled on a faster timetable if the White House follows through with plans to purchase crude outright at a targeted price of $67-$72/bl. Nymex WTI crude futures for delivery in April settled at $67.61/bl on Wednesday.

By Chris Knight

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06/01/25

Caracas clamps down before disputed inauguration

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Canadian prime minister Trudeau to resign

06/01/25

Canadian prime minister Trudeau to resign

Calgary, 6 January (Argus) — Canadian prime minister Justin Trudeau said he will resign as soon as his Liberal Party selects a new leader to run in general elections expected later this year. Calls for Trudeau to resign have been growing for months but became too much to ignore as the Liberals continued to fall further behind the Conservative Party and its leader Pierre Poilievre in polling. Recent polls indicate the centre-right Conservatives would win a majority of seats in the House of Commons if an election were held today. "If I'm having to fight internal battles, I can't be the best option in that election," Trudeau said in Ottawa this morning. Parliament was set to return from a break on 27 January, at which time Conservatives were expected to attempt to trigger an election by way of a no-confidence vote. Canada's governor general — at Trudeau's request — extended the break until 24 March. That break will buy the Liberals time to find a new leader but it will be a tall order for any successor to both unite the party and also connect with Canadians on short notice before an expected spring election. "There will be confidence votes in March," said Trudeau, whose minority government has been propped up by the New Democratic Party (NDP). The NDP has helped Trudeau survive no-confidence votes in recent months, but on 20 December vowed that it would also bring the government down when it returned to session. Trudeau was elected as a member of parliament (MP) in 2008, leader of the Liberal Party in 2013, and has been prime minister since 2015 after defeating the then Stephen Harper-led Conservatives. There is no obvious replacement for Trudeau after deputy prime minister and finance minister Chrystia Freeland resigned last month , citing "costly political gimmicks," unrestrained spending and being at odds over the approach to the "grave challenge" of aggressive US nationalism. US president-elect Donald Trump has threatened a 25pc tariff on all imports from Canada and Mexico unless they tighten borders to crack down on drug trafficking and illegal migration into the US. Trudeau's plan to resign does not change the Conservative party's plans to call for new elections, Poilievre said today. "Every Liberal MP in power today and every potential leadership contender fighting for the top job helped Justin Trudeau break the country over the last nine years," he said. If elected, Poilievre plans to cut a number of environmental programs championed by the Liberals, including the carbon tax. The Conservatives support the continued use of oil and gas, exploration for hydrocarbons, and pipeline construction. The next federal election must occur on or before 25 October this year, according to the electoral calendar. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US crude output at record 13.46mn b/d in Oct: EIA

03/01/25

US crude output at record 13.46mn b/d in Oct: EIA

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US Congress begins with focus on energy, taxes

03/01/25

US Congress begins with focus on energy, taxes

Some Republicans worry that their razor-thin House majority could soon see their caucus fractured, writes Chris Knight Washington, 3 January (Argus) — The new Republican majority in US Congress has set its sights on passing legislation to grow energy production, unwind climate policies and cut trillions of dollars in taxes, but doing so will require the party to overcome its history of infighting. That disharmony was on display last month, when Republicans in the House of Representatives nearly forced a government shutdown by scuttling a spending deal negotiated by their own leaders. Similar dynamics have been at play for the past two years, as rifts over how to govern made it difficult for House Republican leaders to use a tiny majority to extract policy concessions during negotiations. The first test of party unity in the 119th Congress — sworn in on 3 January — will come as House Republicans vote on whether to re-elect Mike Johnson as speaker with an even smaller majority than last year. Johnson can only afford to lose a handful of votes, assuming all Democrats vote against him, before Republicans risk a repeat of 2023, when far-right members ousted the last speaker but could not agree on a replacement for weeks. A lengthy voting impasse could delay the 6 January certification of the election victory of president-elect Donald Trump, who this week endorsed Johnson. Trump campaigned on passing legislation to allow industry to "drill, baby, drill" by increasing federal oil and gas lease sales, removing regulations and unwinding parts of outgoing president Joe Biden's signature Inflation Reduction Act (IRA). Among the options are rescinding a fee on methane emissions that started at $900/t, and requiring more oil and gas lease sales in the US Gulf of Mexico. On taxes, Trump has proposed extending $4 trillion in cuts due to expire at the end of 2025, in addition to cutting corporate rates to as low as 15pc from 20pc, rescinding clean energy credits, and putting a 20pc tariff on all imports. Other items on Congress' to-do list include passing legislation to fund the government and raising the statutory limit on federal debt. Republicans also say they want to pass a bill to expedite federal permitting, after a bipartisan effort to do so failed to advance in December. Learning to two-step Republican leaders have floated a two-step plan to pass Trump's legislative agenda that would use "budget reconciliation" — a legislative manoeuvre that will prevent a Democratic filibuster in the Senate, but which limits the bill to provisions that will affect the federal budget. Senate majority leader John Thune, a Republican from Texas, has suggested packaging immigration, border security and energy policy into a first budget bill that would pass early this year. Republicans would then have more time to debate a separate — and far more complex — budget bill that would focus on taxes and spending. But some Republicans, mindful of a slim 220-215 House majority that will temporarily shrink because of upcoming vacancies, worry the two-part strategy could fracture the caucus. Republicans have yet to decide the changes to the IRA, which includes hundreds of billions of dollars of tax credits for wind, solar, electric vehicles, battery manufacturing, carbon capture and clean hydrogen. A group of 18 House Republicans last year said they opposed a "full repeal" of the law, which disproportionately benefits districts represented by Republicans. Republicans plan to use their expanded influence to push changes at all levels of government and the work it supports. Incoming Republican chairman of the Senate energy committee John Barrasso has issued a report urging OECD energy watchdog the IEA to revive the inclusion of a "business-as-usual" reference case in its annual World Energy Outlook. Barrasso says the IEA has lost its focus on energy security and instead become a "cheerleader" for the energy transition. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Viewpoint: US sour values poised to maintain support

03/01/25

Viewpoint: US sour values poised to maintain support

Houston, 3 January (Argus) — US sour crude prices are poised to maintain recent highs if increased US Gulf coast refinery runs continue to meet market expectations of a tight market. US Gulf medium sour Mars is averaging a near 30¢/bl premium to the Nymex-quality WTI benchmark for the February US trade month to date, and held a roughly 65¢/bl premium during the January trade month, the highest level since July. January Mars averaged around $2.40/bl below March Ice Brent, marking its narrowest average discount to Ice Brent two months forward since the August trade month. US Gulf sours reached multi-year highs on 18 December supported by tight supply and high demand. Refinery runs have increased with improving margins, tightening the supply of sour crude in the US and further boosting differentials. Refinery runs nationwide rose last week by 39,000 b/d to 17mn b/d but were 89,000 b/d lower than the same week in 2023, according to the Energy Information Administration (EIA). Companies were also heard short-covering US sours in an already tight market, likely exacerbated by end-of-year inventory drawdowns for tax purposes. Recent higher prices follow much lower relative values for Mars starting in the fall when refinery runs fell because of unfavorable margins, maintenance and US Gulf coast hurricane-related outages combined with lower export demand. Mars exports have been limited by competitive Middle Eastern term pricing for shipments to Asia-Pacific and European destinations, despite the continuation of Opec+ production cuts tightening supply. Also, blending has emerged in China for TMX-sourced Canadian heavy crude with light Murban as a Mars replacement . Offshore pipeline maintenance in October also pushed typically Texas-delivered volumes over to the Louisiana Gulf coast, adding pressure to the medium sour crude market in the region. But increased US Gulf refinery demand is leading to higher heavy Canadian crude prices at the US Gulf coast, alongside support from Trans Mountain Expansion (TMX) pipeline exports and higher US midcontinent refinery demand tightening supply. Western Canadian Select (WCS) Houston averaged around a CMA Nymex -$4.00 for January trade. The January WCS Houston discount to Mars averaged about $4.60/bl but was inside $4/bl for November and December volumes. The higher Canadian crude prices are making it less economical for US refiners to blend heavy low-TAN imports with Permian WTI as a cheaper alternative substitute for Mars or other medium sours. Tax-related end-of-year inventory draw downs had tightened the market heading into the new year, but this was exacerbated by the US Strategic Petroleum Reserve (SPR) being slated to receive 2.5mn bl of domestic sour crude deliveries in the first three months of 2025 . However, LyondellBasell's plan to begin shutting down its 264,000 b/d Houston, Texas, refinery starting in January and stop refining crude completely by the end of the first quarter will reduce Gulf coast sour demand. Between May and September, the facility imported just under 200,000 b/d on average, with roughly 80pc being Canadian and Colombian sour crudes. Offshore US Gulf production is also expected to increase, which could ease a tight market and weigh on differentials. Chevron brought production from its 75,000 b/d Anchor platform into the Mars system in 2024, while Southern Louisiana Intermediate (SLI) and Texas-delivered SGC and HOOPS flows will receive crude from new facilities in the coming year. But EIA forecasts show total US Gulf production essentially flat from 2023 as new output is offset by natural declines. Other price-influencing factors in the coming year are less certain. Concerns surrounding the potential impact of US president-elect Donald Trump's plan to impose a 25pc tariffs on all imports from Canada and Mexico have bolstered sour crude prices in the US over recent weeks. Additionally, US medium sour crudes have been supported by Opec production cuts, with the recent decision to delay unwinding those cuts yet again, adding to the January value boost. The next Opec and Opec+ meetings are scheduled for 28 May. By Mykah Briscoe and Amanda Smith Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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