Reuters: Regulatory News: UPDATE 2-U.S. loans reserve oil to Marathon Petroleum

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UPDATE 2-U.S. loans reserve oil to Marathon Petroleum Aug 31st 2012, 16:30 Fri Aug 31, 2012 12:30pm EDT * Loan of 1 mln barrels not expected to move oil prices * Marathon refinery at reduced rates after Isaac * No other refiners asked DOE for oil - source WASHINGTON, Aug 31 (Reuters) - The United States will loan 1 million barrels of crude from emergency reserves to Marathon Petroleum Corp after one of its refineries cut operating rates in the wake of Hurricane Isaac, the Department of Energy said on Friday. "This emergency loan from the Strategic Petroleum Reserve will help ensure Marathon's refining operations have the crude oil they need to continue operating," Energy Secretary Steven Chu said. The DOE added it continues to "keep all options on the table to address additional or sustained oil supply issues." The White House has been considering plans to tap the emergency reserves as tension over Iran's nuclear program and Western sanctions on Tehran have boosted oil prices. Countries in the West believe Iran is trying to develop nuclear weapons, while Tehran insists its nuclear program is for peaceful purposes. Sources have said the Obama administration is in the data-gathering process and would not likely make a decision on a larger tapping of the reserves until early September. Energy Secretary Chu has the power to make small loans of a few million barrels from SPR which can hold up to 727 million barrels. An analyst said the loan of sweet crude oil to Marathon should not have a big impact on markets. "This is a small, limited time swap in response to Isaac and should not have a major impact on crude prices, although, as DOE noted, it is keeping the option of a larger release on the table for future or sustained disruptions," said Bob McNally, head of the Washington-based consulting firm The Rapidan Group. Oil futures in New York were up more than a $1.50 after the loan announcement to more than $96 per barrel. The DOE has not received additional requests from other refiners along the U.S. Gulf Coast for oil loans, a source familiar with the talks said. Marathon said its 490,000 barrels per day refinery in Garyville, Louisiana was running at reduced rates but did not sustain significant damage. Isaac made landfall this week as a Category 1 hurricane but has moved inland and has weakened to a tropical depression. Link this Share this Digg this Email Reprints

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