Oil Traders May Buy Discounted Strategic Petroleum Reserve Oil And Simply Store It

[jaxx]

JP Morgan, Koch, Other Oil Traders May Buy Discounted Strategic Petroleum Reserve Oil And Simply Store It

By Lee Fang on Jul 5, 2011 at 3:37 pm

To stem supply disruptions from Libya and to disrupt the grip of nonconsumer oil speculators, the U.S. Department of Energy announced the sale of 30 million barrels of crude as part of the International Energy Agency’s effort to release 60 million barrels into the global oil market. The sale of oil from the Strategic Petroleum Reserve, as well as the suggestion from the Obama administration that more sales could be announced in the future, has already lowered the price of crude. As the Baker Institute’s Amy Myers Jaffe has noted, the release sends a “signal that should keep rampant speculation at bay.”

However, as Bloomberg reported last week, “some of the oil being released from the U.S. Strategic Petroleum Reserve to bring down prices may be held by traders for later sale rather than sent directly to refiners for processing into gasoline or other fuels.” Some of the purchasers have claimed that they will immediately refine the SPR crude. But many banks and large oil speculators looking to purchase the oil may intend to simply hoard it:

Representatives of trading companies including JPMorgan Chase & Co., Morgan Stanley (MS), Hess Trading Company and Koch Supply & Trading LP joined Valero Energy Corp. (VLO) and Statoil ASA in questioning Energy Department officials June 28 about shipping options and requests for waivers of the Jones Act.

<..> Argus Media reports that Koch Industries has already shown interest in leasing super tankers for storage of crude in the Gulf of Mexico. The Economist points out that the small rebound in oil prices have already provided an incentive for oil traders to store, rather than refine, the oil: “If a trader was able to purchase West Texas Intermediate—the oil held in America’s Strategic Petroleum Reserve (SPR)—at the spot price on June 24th, they would already be sitting on a tidy profit.”

http://thinkprogress.org/green/2011/07/0...e-spr-oil/

Does this mean that if they aren't given the waivers that this can't happen?

[atomic]

Good gawd almighty! Can't they control the speculators? This isn't rocket-science.