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415 comments on DrumBeat: September 21, 2006

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Buckler on September 21, 2006 - 3:45pm Permalink | Subthread | Parent | Comments top
On the price of oil, inventories have in the past played a role.  Traders look at the numbers and then in a few minutes the price moves.

On inventories, the following points make the number not very meaningful:

  1. Now (9/06) the only reason US oil inventories are up are because of draw downs in the US SPR that haven't been replaced.  
  2. As Days Forward Cover, current US inventories (minus SPR withdrawls is at the low range.
  3. Minimum US crude oil stocks for proper functioning of the system according to Matt Simmons are between 280 and 300M barrels - now we are "awash" with crude with 325M barrels, that only 1 to 3 days of supply before problems.
  4.  Almost all countries in the world except the US (because we've drawn down and not replaced our SPR) have lower than average oil stocks in 2006.

  5. Drawdown in US SPR
http://www2.spr.doe.gov/DIR/SilverStream/Pages/pgDailyInventoryReportViewDOE_new.html  Strategic Petroleum Reserve Net movement of 13.4M total from Sept 05 through Oct 06.  Net US SPR drawdown of 11M barrels, net OECD donation of 2.4M barrels.  No new fillings of US SPR ordered since Sept 05 and for foreseeable future.

  1. Days cover (from 1999 but recent info not available: http://tonto.eia.doe.gov/oog/info/twip/twiparch/050323/twipprint.html)  

  2. Matt Simmons on "minimum level" of inventories http://www.simmonsco-intl.com/files/060997.pdf

  3. Data for European and Asian Oil Stocks http://omrpublic.iea.org/stocks/ct_cr_ov.pdf#search=%22oil%20stocks%20iea%202006%22
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westexas on September 21, 2006 - 5:18pm Permalink | Subthread | Parent | Comments top
Buckler,

Very good info.  Thanks.

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oilmanbob on September 21, 2006 - 8:48pm Permalink | Subthread | Parent | Comments top
Buckler, this is wonderful info, it really helped my understanding of the actual state of crude oil stocks. It really shows how the main stream media manipulates the news and how crude oil stocks are really much lower than they represent. Thank you, even if it just reinforced my paranoid suspicions with facts!
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Buckler on September 22, 2006 - 1:32pm Permalink | Subthread | Parent | Comments top
You're welcome.  I hope this clears up to some degree the apparent and repeated "contradiction" that we are awash with oil in inventories, so how can we be short of crude.  The reality is there is no contradiction -- curde oil inventories -- when adjusted for SPR withdrawls -- are very low.  

Actually it is easy to get this idea -- the latest EIA weekly oil report released 9/20/06 begins with the title "How Low Can it Go?" and relies on both "technical" chart data (it is stated that the decline represents "the second-largest uninterrupted decline in the history of the survey (dating back to August 1990") and then also uses inventories as a reason why oil prices are dropping.  A chart is very conspicuous that shows higher than average crude oil inventories (of course no mention of world oil inventories and the fact that we've withdrawn from the SPR).  No other reasons are given for the price decline. see: http://tonto.eia.doe.gov/oog/info/twip/twip.asp

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Buckler on September 22, 2006 - 1:35pm Permalink | Subthread | Parent | Comments top
Actually correct that, the EIA says there are some "seasonal" factors to the decline of gasoline in addition to technical and inventory.
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Buckler on September 22, 2006 - 1:38pm Permalink | Subthread | Parent | Comments top
Actually correct that, the EIA says there are some "seasonal" factors to the decline of gasoline in addition to technical and inventory.
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Buckler on September 22, 2006 - 2:58pm Permalink | Subthread | Parent | Comments top
Actually correct that, the EIA says there are some "seasonal" factors to the decline of gasoline in addition to technical and inventory.
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415 comments on DrumBeat: September 21, 2006

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