surprises with 5 million barrels from crude oil reserve sale
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[March 13, 2014]
WASHINGTON (Reuters) — The U.S.
Department of Energy will sell up to 5 million barrels of crude oil
from the Strategic Petroleum Reserve, a move it said was to test the
capabilities of the nation's emergency stockpile in a rapidly
changing oil market.
In the first sale from the reserve since 1990 that is specifically
designed as a test, the department will offer sour crude from its
West Hackberry and Big Hill sites on the U.S. Gulf coast, with bids
due March 14.
Surging U.S. shale oil production has changed the logistics of U.S.
crude markets. Instead of moving oil from the Gulf up to the center
of the country, as was traditionally the case, major pipelines have
reversed course to move a glut of shale oil from places like North
Dakota to points south.
"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 systems
capabilities in the event of a disruption," he added.
The DOE said the test had been discussed for months internally and
was timed so refineries interested in buying from the reserve can
plan for when their facilities come out of annual maintenance cycles
and crude oil stocks are needed in preparation for the switch over
to summer grade gasoline.
The release would be equivalent to about one-quarter of the crude
oil used in the United States every day, but the news still helped
to push oil prices toward one-month lows.
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The most recent emergency sale from the reserve was in 2011, in
response to the civil war in Libya, when the Energy Department
authorized a tap of 30 million barrels in coordination with the EU,
which tapped a similar amount from its reserves.
(Reporting by Valerie Volcovici, Ayesha
Rascoe and Timothy Gardner; editing by Ros Krasny and Bill Trott)
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