WASHINGTON, 15 September 2005 — The US government said yesterday it had sold 11 million barrels of oil to replenish companies’ supplies after Hurricane Katrina, less than half the total offered in a sign that output is coming back.
The Department of Energy had made available up to 30 million barrels to companies from its Strategic Petroleum Reserve, in a concerted move taken with US industrial partners to flood the market with supplies. But less than half of that was taken up, in what officials said was a sign that normal production is coming back a fortnight after Katrina slammed into the southern US coast to knock out a big chunk of refinery capacity.
“The United States is committed to using all of the tools at our disposal to help keep our oil and gasoline markets well supplied,” Energy Secretary Samuel Bodman said. “This sale ensures that refineries have the petroleum they need to keep gasoline and diesel fuel flowing to American consumers while production facilities in the Gulf region regain their capacity,” he said. “As we move forward, we will continue to monitor the overall supply of petroleum available and the needs of the nation as we determine next steps.”
Analysts said not all of the 30 million barrels made available in the United States were taken up because companies could have found the oil cheaper elsewhere, or damaged refineries simply cannot handle any more. But DoE spokesman Craig Stevens said: “We see this as an indication that the market is well supplied. “Naturally if there is an ensuing need for release of petroleum, we will revisit a possible sale or continue with loans to companies,” he told AFP.
The DoE announced the winning bidders as Astra Oil Co., BP Oil Supply Co., Marathon Ashland Petroleum LLC, Shell Trading (US) Co. and Vital SA Inc. They paid a total of more than $702 million for the oil.
Soon after Katrina struck, the department released 12.6 million barrels of crude oil to Gulf Coast refiners in the form of loans. The 11 million barrels announced yesterday were straight sales.
The day after Katrina made landfall east of New Orleans, New York crude futures soared to a record high of $70.85 a barrel. But prices have since calmed, helped by the coordinated release of supplies from the United States and its partners in the International Energy Agency, which together said they would release another 30 million barrels.
World oil prices surged yesterday after data showed that US crude oil inventories had fallen sharply last week in the wake of Hurricane Katrina.
New York’s main contract, light sweet crude for delivery in October, jumped $1.24 to $64.35 per barrel in early deals. In London, the price of Brent North Sea crude for October delivery gained 99 cents to $62.60 per barrel.