The Oil Drum | Wednesday Open Thread (and News Dump)

198 comments on Wednesday Open Thread (and News Dump)

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westexas on March 29, 2006 - 12:43pm

Note that it is quite likely that light sweet crude as percentage of total imports has dropped from March, 2005 to March, 2006.

No one knows for sure because no one tracks inventories on the basis of quality, but the price spread between light, sweet and heavy, sour is certainly suggesting a falling light sweet supply.

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AlanfromBigEasy on March 29, 2006 - 2:20pm

> ...falling light sweet crude supply

I thought that is was generally accepted thet we passed "Peak Light Sweet Oil" in either 2000/2001 (statistical tie) or 2004 (depending upon how "light" is Light).

So today, increasing heavy and/or sour crude, decreasing light sweey crude. Question is, are heavy/sour increases larger or smaller than light sweet decreases ?

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westexas on March 29, 2006 - 2:28pm

It seems unreal, but no one tracks inventories on the basis of quality. For all we know, 100% of the build in inventories year over year has been heavy, sour. My theory is that a continuing build in heavy, sour inventories is obscuring falling inventories of light, sweet.

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LevinK on March 29, 2006 - 2:39pm

Maybe this is the underlying explanation why we are at long in oil inventories, but getting tighter on gasoline.

Yesterday oil rose because of the drop of gasoline inventories (by 5 mln.barrels), even though the oil inventories are on the rise again (by 2 mln.barrels).

http://www.bloomberg.com/news/markets/energy.html

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BabyPeanut on March 29, 2006 - 7:44pm

How does that explain anything?

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LevinK on March 29, 2006 - 9:00pm

First, AFAIK more heavy/sour oil is needed to produce a unit of gasoline - hence the oil inventories may need to rise slightly to reflect that.

Second, and more importantly - worldwide there is a shortage of capacity, capable of processing heavy/sour crude. And a lot of refineries are upgrading now. It is possible that a lot of the piled up sour/heavy crude is simply waiting for somebody who is able to process it.

The result of both things is that oil inventories would rise, but there will be shortage on finished products.

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BabyPeanut on March 30, 2006 - 7:07am

Can I make this any simplier? How about charts from the current This Week In Petroleum

IMPORTS go down:

DEMAND goes up:

STOCKPILES go down:

What more do you need?

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LevinK on March 30, 2006 - 9:39am

You are missing the domestic production variable in the equation. My guess is that it will also be down.

The more important question I was trying to answer is why gasoline production and imports are dropping even though oil stocks are on all times high? The relation between sour/heavy and light sweet crude could be the answer.

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Leanan on March 30, 2006 - 10:03am

Maybe it's just a refinery issue? It's the time of year when they're switching over to summer blends. Plus that Amerada Hess refinery was offline last week due to technical difficulties.

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BabyPeanut on March 29, 2006 - 7:48pm

MTBE? HA!

Assessment needed before restart in Niger Delta -oil
... The companies also are calling for sustainable peace in Nigeria's Niger Delta, where attacks by militant youths have cut the country's oil output by about 641,000 barrels a day, out of a daily output of 2.4 million b/d. ...

Now that's an explanation.

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198 comments on Wednesday Open Thread (and News Dump)

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