SPR numbers

Post Reply
cmm3rd
Posts: 420
Joined: Tue Jan 08, 2013 4:44 pm

SPR numbers

Post by cmm3rd »

Below was posted elsewhere regarding what type of crude is being sold from the US SPR. I cannot vouch for the information, but thought since HMENF (others?) produce mostly heavy oil (and currently is seeing a bigger than normal discount because of the SPR release), it might have implications. If the information is accurate,
- does it explain the size of the added discount,
- might it predict a reduction in that discount when the SPR release ends (sudden loss of heavy oil supplied to the market), and
- might it predict increased demand for heavy oil when the SPR release ends and it is decided that our national security needs dictate that the SPR be replenished with heavy oil?
SPR is going down. Everyone knows that. What is less known is the SPR has two types of crude: sweet and sour. The sour is heaver and thus as many on this board know, in more demand. The permian is producing tons of light sweet. So...
Guess which oil the SPR is selling? mmm.

Facts:
On Dec. 31, 2019, the SPR had:
251 million sweet and 384 sour (2019 annual report to Congress)
The current release shows the following:
234 million sweet and 264 sour

So since the end of 2019, they have sold 17 sweet and 121 sour or 88% sour.
Now lets do a little math:
If the Admin continues for 16 weeks and the same percentage of sweet/sour mix is used (which is somewhat conservative because there is evidence even more is sour) the following will be left:
220 Sweet
164 Sour

So in a very short time, the amount of sour oil in the SPR is going down to very low levels. Another way to put this:
A current rate of sales they have 42 weeks of sour left. After that it will be ZERO.
How much sour oil will be in the SPR by the end of 2022?
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: SPR numbers

Post by dan_s »

Heavy crude, which Hemisphere produces, will remain in high demand because of the diesel shortage. Refiners cannot make diesel out of the ultra light shale oil.
Don Simmons has confirmed the realized prices that I am using in my Hemisphere forecast model.
BTW Hemisphere paid their first quarterly dividend yesterday and I expect the dividends to go up after they pay off all of their bank debt this quarter.

Hemisphere's oil is not sour, which is a good thing.
Dan Steffens
Energy Prospectus Group
Post Reply