85 comments on Tight storage may lead to huge oil price drop
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85 comments on Tight storage may lead to huge oil price drop
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It would be interesting to look at the historical build in inventories plotted as days-of-supply for the world rather than just barrels. Clearly, the world's demand for oil on a daily basis has risen tremendously over the last decade (where were China and India then?).
I have a feeling that the press are touting a large inventory build where there isn't - at least that is what Matt Simmons is saying.
Anyone else have any thoughts on this? A large drop off in price would be a disaster for the energy industry.
I am also wondering whether we can now expect to see more demand WW as the emerging economies start to heat up again?
Here is the US Crude Oil Days of Supply graph from the EIA:
I think that it is pretty clear that the industry has been moving toward a Just In Time inventory system in the 20 year or so time period from about 1984 to 2004, primarily IMO because they have the SPR as a backstop. It looks like 1995 was the inflection point between an average of over 25 Days of Supply to an average of less than 25 Days of Supply. So, recent inventory levels are high based on five year numbers, but not based on pre-1995 numbers.
Having said that, it seems to me that something's gotta give. I don't see how we can keep seeing a combination of rising oil prices and rising inventories.
As long as the Fed keeps printing money and giving it to the banks, we can keep seeing a combination of rising oil prices and rising inventories and just about anything else that normally wouldnt make sense.
Hello,
Global physical oil consumption is clearly down (for the US it is down approx. 1,5 Mb/d according to data from EIA). Someone proposed that using US consumption (25 % of global petroleum consumption) as a proxy for global consumption this would suggest that global physical consumption now is down with approximately 5-6 Mb/d year on year.
As storage both by EIA and IEA is reported considerable up, the days foreward has grown rapidly.
Ref. also westexas comment where a chart of this is added.
I have used the data as these are published by EIA and IEA and the data has not been subject to a third party revision.
There seems to be a lot of expectations out there about the economies heating up again, could explain the growth in oil prices.
- Rune