tyb's
U.S. to Start Buying Oil for Emergency Reserve Within Two Weeks
The U.S. is preparing to start buying as much as 77 million barrels of oil for its emergency stockpiles within the next two weeks, an effort by President Donald Trump to support the domestic industry and boost reserves at cheap prices. While purchases of U.S. crude may begin swiftly, deliveries into the four sites that make up the country’s Strategic Petroleum Reserve could take months to complete, a senior Energy Department official said Sunday, asking not to be named before formal announcements. Pipeline and port capacity constraints could figure into the timing, the official said.
The quick purchase plans are meant to fulfill Trump’s announcement Friday that the U.S. would buy “large amounts” of oil to fill up the reserve, which he said would help the U.S. oil industry while “saving the American taxpayer billions.” Energy Secretary Dan Brouillette directed Energy Department officials “to immediately initiate the process of purchasing American-made crude oil for storage in the U.S. Strategic Petroleum Reserve as expeditiously as possible.” U.S. benchmark oil lost 23% last week, hammered by a combination of the global Covid-19 pandemic and a Saudi-Russia price war that is flooding the market. Prices jumped after Trump gave the order Friday to fill the reserve, paring their worst weekly performance since 2008, but lost more than 6% when this week’s trading opened in Asia.
The intention is to focus on U.S. oil producers, but that’s not expected to limit the involvement of traders or other intermediaries, the official said. The reserve could take in about 225,000 barrels a day, though the four sites, each with several underground salt caverns, can be filled at different paces. The U.S. stockpile, which was set up after the Arab oil embargo in the 1970s, has a maximum storage capacity of about 713.5 million barrels in salt caverns across the U.S. Gulf Coast. It now contains about 635 million barrels. A full 77-million-barrel transaction would cost about $2.4 billion at Friday’s closing price of $31.73 a barrel for West Texas Intermediate, the U.S. benchmark.
https://www.bloomberg.com//news/articles/2020-03-15/u-s-to-start-buying-oil-for-emergency-reserve-within-two-weeks
It exposes the system that created trillions in paper debt. The lower rates go the less it performs. If you hold this debt you are not having any ROI…because you bought it with a higher yield expectation. The value of it rises but as that habbens the exits door gets moar and moar crowded. So the FRBNY steps in and becomes the buyer of last resort. Hence the announcement today-$40B will de done over 6 operations just tomorrow
-10:15 – 10:30 am: Treasury Coupons 0 to 2.25 year sector, for around $10 billion
-11:00 - 11:15 am: Treasury Coupons 2.25 to 4.5 year sector, for around $8 billion
-11:45 am – 12:00 pm: Treasury Coupons 4.5 to 7 year sector, for around $9 billion
-12:30 – 12:45 pm: Treasury Coupons 7 to 20 year sector, for around $5 billion
-1:15 – 1:30 pm: Treasury Coupons 20 to 30 year sector, for around $5 billion
-2:00 – 2:15 pm: TIPS 7.5 to 30 year sector, for around $3 billion
https://www.newyorkfed.org/markets/domestic-market-operations/monetary-policy-implementation/treasury-securities/treasury-securities-operational-details
THis does not count teh daily REPO/Reverse-REPO (s) that re continuing in concert with this. They aslo raided those amount twice lst week starting last monday.
Monday's announcement
https://www.newyorkfed.org/markets/opolicy/operating_policy_200309
Wednesday's announcement
https://www.newyorkfed.org/markets/opolicy/operating_policy_200311
The Emergency set of OMO's on Friday
Statement Regarding Treasury Reserve Management and Reinvestment Purchases
https://www.newyorkfed.org/markets/opolicy/operating_policy_200313
and Today's
Statement Regarding Treasury Securities, Agency Mortgage-Backed Securities, and Repurchase Agreement Operations
https://www.newyorkfed.org/markets/opolicy/operating_policy_200315
It's a range. .00-.25%. Effectively it is zero.
np.