US oil stock release imminent, consultant says
London (Platts)--6Sep2012/346 pm EDT/1946 GMT
The US will release oil from strategic stockpiles in the coming days,
UK-based consultancy Petroleum Policy Intelligence said Thursday, quoting
sources which it did not name.
"Faced with persistently high oil prices that are believed to be
undermining other policy measures aimed at re-invigorating economic recovery,
the US will go ahead with a release of strategic oil stocks in the coming
days, PPI learns from well-informed sources," the consultancy said in a note
Jen Stutsman, US Department of Energy press secretary, said: "We have
nothing more than what we've said in the past. Numerous people at the White
House and here have made it clear that a release is always an option that's
on the table as we look at global oil markets. But no decision has been
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There has been renewed talk in recent weeks that the US could decide to
release oil stocks to cool high global oil prices.
However, the International Energy Agency, which coordinates oil stock
releases among its member countries, has said only that it continues to
monitor the market and remains "ready to act if necessary."
A spokesman for the IEA declined to comment Thursday, saying it would
not discuss market rumors.
PPI noted that there had been public resistance from several IEA member
countries to such a move being carried out through the agency.
"But there are now indications that senior IEA officials accept that the
US will go ahead with a stock release, either through the IEA's stock release
protocol or independently," PPI said. "The UK and possibly France are
likely to support such a move by releasing volumes of their own strategic oil
A spokesman for the UK Department of Energy and Climate and Change said
no decision has been taken on a release.
"As noted recently by the G7, members are monitoring the situation
carefully and stand ready to call on the International Energy Agency to take
appropriate action as required. The UK is an active member of the IEA, which
continually monitors the oil market," he said in an emailed statement. "UK
and other IEA members routinely discuss oil market issues. It is clear that
the oil market is tight, and we are watching developments carefully, but no
decisions have been taken to release stocks."
A senior official at France's strategic oil stocks agency, the CPSSP,
said there had as yet been no official word from Paris about a possible stock
Asked whether the agency had been informed by the French government to
prepare for a release, Jean-Marc Tenneson, general delegate at the CPSSP,
said there was "nothing new at the present moment."
"It is absolutely not the case. I have not received instructions or
information about this issue," he said.
France has been building up its stocks in recent months -- in part
because it needed to increase its obligation to 29.5% of its consumption in
the previous year, up from 28.5%, and in part after operators shifted
privately held stocks to the state CPSSP after the government imposed a
Eur550 million windfall tax on stocks.
The CPSSP holds oil and refined product stocks at around 100 sites
throughout France. During the International Energy Agency-coordinated stock
release last year to mitigate the loss of Libyan production it agreed to
release 3.24 million barrels to the market.
PPI, meanwhile, said the challenge of achieving consensus on an IEA
release among the agency's 27 members would be more difficult than last year,
"especially after what several member countries regard as the inconclusive
market outcome of the 2011 stock release."
Last summer, the US released some 30 million barrels of crude as part of
a 60 million-barrel release coordinated by the IEA and intended to compensate
for the loss of supply from Libya, where an uprising against the regime of
Moammar Qadhafi had been under way since mid-February.
"As far as the US is concerned, the decision appears to have been taken.
Government officials in Washington are now involved in intensive talks to
establish precisely how the policy move will be messaged to markets," PPI
"The relatively muted impact of Hurricane Isaac left just one Gulf of
Mexico refiner to ask the government for SPR crude: a 1 million barrel loan
to Marathon Petroleum. So justification for the broader release is likely to
be linked to the fall in Iranian exports seen since European and US sanctions
on Iran came into effect mid-year," it said.
The likely impact of a stock release could be among topics discussed
later Thursday at a White House meeting with oil analysts, according to a
source from one company which will be represented at the session.
Sources said the meeting had been called before Hurricane Isaac hit the
US last week and had not been labeled as a special session to discuss a
potential stock release.
One source said the meeting would discuss "the subject of what's
happening in the market" and not specifically an SPR release.
"It's being pitched as a general market meeting," another source said,
adding that it had been set up more than a week ago.
However, he added, "my guess is that if they are planning a release they
will discuss it at the meeting."
A senior OPEC delegate, meanwhile, said any decision by the US to
release oil from strategic stockpiles would be "a sovereign issue," but that
the general belief among OPEC oil producers was that the US Strategic
Petroleum Reserve should not be used to dampen oil prices but should only be
used when there is a supply shortage.
"At this time there is no shortage," he said.
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