Corrects paragraph 8 to state that comment is due to an energy analyst and not to a trader.

Florence Tan and Arathy Nair

(Reuters) -The United States launched an auction to purchase 32 million barrels of crude oil from four strategic petroleum reserve (SPR), sites. The delivery will take place between December 2022 and April 2022. This was announced by the Department of Energy (DOE).

SPR oil (which is mainly blended crude sour) is anticipated to decrease the U.S.’s sour Mars price and help buyers in Asia that process mainly high sulphur oils.

U.S. President Joe Biden’s administration announced Tuesday that it would release millions of barrels from its strategic reserves to help cool oil prices. This was in coordination with China and South Korea as well as Japan, Japan, South Korea, South Korea, Japan, China, India, South Korea and Britain.

DOE stated on its website that about 10,000,000 barrels would be made available in Texas from Big Hill, Bryan Mound and Louisiana from West Hackberry and Louisiana from West Hackberry. There will also be approximately 7 million barrels in Louisiana from West Hackberry. In Louisiana, DOE estimates another 5 million barrels coming from Bayou Choctaw.

Delivery will be January to April 2022. Early deliveries are accepted until December.

DOE stated that buyers will need to return oil between 2022-2024.

Businesses are asked to send bids by Dec. 6. Contracts will be awarded not later than Dec. 14.

Viktor Katona, JBC Energy analyst, stated that this is equivalent to 270,000 b/d of medium-sour grades and direct competition to Mars. He also said API gravity will be 31 to 33.

“Overall, very good news for Asian buyers of Mars – already depressed at some -$3.50 per barrels vs WTI, Mars should weaken even further.”

DOE will announce that up to 18,000,000 barrels of SPR crude oil can be sold by Dec. 17th.