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US refiners big buyers of 11 million barrels from strategic oil reserve

U.S. oil refiners were big buyers of the 11 million barrels of oil scheduled to be released from the U.S. Strategic Petroleum Reserve, or SPR, according to a Department of Energy document released Aug. 31.

Buyers included six companies: Exxon Mobil Corp., Motiva Enterprises LLC, Phillips 66, Royal Dutch Shell PLC, Marathon Petroleum Corp. and Valero Energy Corp.

Prices ranged from $67.66 a barrel to $69.05/bbl.

The U.S. Energy Department announced the congressionally mandated sale on Aug. 20, imposing an offer deadline of Aug. 28.

Exxon bought about 3.3 million barrels of oil from the reserve, Motiva purchased 2.4 million barrels, Phillips 66 bought more than 2 million barrels, Royal Dutch Shell PLC procured nearly 1.6 million barrels, Marathon Petroleum bought nearly 1.4 million barrels and Valero bought 330,000 barrels.

The sale was prompted by the 21st Century Cures Act pf 2016 and the Bipartisan Budget Act of 2015. However, analysts with ClearView Energy Partners LLC emphasized the timing of the sale with respect to the reinstatement of Iran oil sanctions.

"Choosing the earliest possible opportunity afforded by the statute would appear to reflect President Donald Trump's concern regarding oil market tightness," the analysts wrote Aug. 20, noting that the sale does not prevent Trump from invoking emergency authority under the Energy Policy and Conservation Act to sell up to 30 million barrels in conjunction with reimposing sanctions on Iran.

"We would view such an emergency sale as unlikely before [sanctions take effect on] Nov. 4 ... Negotiators may not want to offer SPR barrels to reward cuts before they materialize."

According to the energy department's initial announcement, oil from the latest sale will be delivered in October and November, being drawn from the Bryan Mound and Big Hill storage facilities in Texas, as well as the West Hackberry facility in Louisiana.

Established in the wake of the 1973 to 1974 Arab oil embargo, the SPR is the largest government-owned stockpile of crude oil in the world, having a design capacity of 713.5 million barrels.