Trading desk has heard that after 4 weeks of "reported" decreases in inventory, two tankers were allowed to unload this week.
It is so the programs can be stopped and reset. Mathematically, they haven't been able to figure out both sides working concurrently. The buy the dip will cause massive paper losses and the buying will need to be interrupted to start recouping these loses that machines are incurring for the portfolio.
But inventory numbers submitted by the very oil companies that scarcity would benefit is more important. This is much more then a disconnect between the markets and economy.
With no tankers available to store crude inventory, you will now see super tanker trailers on large parcels of land that the oil companies own, but they will say if it is not in their inventory tanks, it doesn't count.
Look at the GPS of the super tankers. They are being kept out of port to get the price of crude up on speculation based on perceived scarcity even though there are no more tankers left to store crude. This is as criminal as it gets when reporting agencies depend on the very oil companies that misreporting benefits.
are being held lower by oil tankers not allowed to unload until the maximum price for barrel is achieved. EIA and API both get their inventory numbers from the very oil companies that are trying to give the look or scarcity even though they have purchase orders for millions of gallons of crude sitting on tankers waiting to be unloaded into their tanks and being counted. It costs far less to store the oil on the tankers then to unload and have it depress the price of crude.
The EIA and API get their inventory numbers from the US oil companies and since the oil companies know that a perceived shortage would move oil prices up, they left their oil deliveries cruising around the gulf until $50 bbl oil could be achieved. Only landed oil is counted, not the oil that was ordered with a PO that is in transit.
US oil settles down 0.3 pct, or 15 cents, at $49.33 a barrel
Fri, 27 May 2016 19:34:00 +0100
Oil retreated from 7-month highs as traders weighed the prospect of crude production intensifying as prices remain near $50 a barrel.
With oil stocks trading at $65 bbl. and stocks are a forward indicator, do they come down to the $35 bbl valuation that is the most anticipated or continue to have excess valuations?
It never reached it. Now they are calling for $60 bbl. It will never reach it. All this experts use their time to promote their favored clients and their own positions. All you have to do is continue to look at supply, production and usage. Inventory is a function of the 3. So when the petroleum institutes report lower inventory, it doesn't make mathematic sense. Production is at all times high, except in the US where the profits of oil companies, dividends of oil stock holders and bonuses of oil company execs are more important then oil company jobs. Disruptions are more then offset by new production from Iran and production increases from commodity based economies. Industrial production and use is down. Gasoline is offset by heating oil. The net is we are running out of tankers to store the crude, even though the oil companies, by not accepting the physical inventory, would have you believe their is a reduction in supply.
That there is a misunderstanding in the EIA and API inventory reporting. That it doesn't include crude in supertankers that have been given instructions not to park and unload. Imagine if the information that credit card companies use to be able to collect on open balances were supplied by the consumers? They could say that their money was in the "bank" and not physically in hand and so couldn't be counted as available for payment.
Look at the yahoo economic reports for the last few weeks and see the variance in week to week reporting. It obvious that the oil companies that are reporting inventory to EIA and API are no refilling their landed storage tanks with the millions of gallons sitting or cruising waiting for the call into port.
Millions of Barrels of Oil Floating in the Ocean
Tim Maverick, Senior CorrespondentIt
It seems the Bermuda Triangle is on the move – large ships are disappearing all over the world!
At least that is what it seems like lately… with massive oil tankers “going dark” and hiding out in international waters.
In fact, the world’s largest oil tanker – the TI Europe, capable of holding 3.2 million barrels of crude oil – is believed to be floating offshore of Singapore brimming with oil.
So why is all this black gold just sitting and not being sold?
Well the unusual oil market conditions of the last few months have revamped the use of a technique not seen since 2010.
Companies are storing vast amounts of oil on tankers because they are waiting for the perfect time to sell – when prices are at their highest.
Accounting Method Sucks Up Oil
By Dan Strumpf
NEW YORK—An accounting practice is making the millions of barrels of excess crude that have flooded the oil market disappear—for a few weeks, anyway.
To avoid a tax charge tied to rising oil prices, refiners and other companies that store crude are scrambling to make sure they end the year with the same inventories that they had at the start. Stockpiles on the Gulf Coast plunged nearly 7 million barrels in the week ended Nov. 12, the region's biggest drop in over two years, according to the Energy Information Administration. Another 25 million barrels need to go for this December's inventories to match last year's. But if past years are any indication, inventories are likely to rise just as quickly with the start of the new year.
but if there is a PO for it and they intentionally do not unload to create scarcity does that warrant a move up in crude prices
As reported by oil companies, only the landed inventory. Not the oil cruising around waiting to be called into port to be unloaded that is on purchase orders, just not released. Some of these tankers hold millions of gallons of crude that will quickly offset the 3 weeks of "lower" inventory reported to the EIA and API.
your points are well taken but not correct.
Supply is understated and they have no place to put it
Demand is not increasing. gasoline barely replaces heating oil
Production is at record increases in commodity based economies, just not in the US because it is more important to put people out of work on the rigs then for the executives of oil companies to take less in their bonuses.
Long Range (LR) class ships are the most common in the global tanker fleet, as they are used to carry both refined products and crude oil. These ships can access most large ports that ship crude oil and petroleum products. An LR1 tanker can carry between 345,000 barrels and 615,000 barrels of gasoline (14.5-25.8 million gallons) or between 310,000 barrels and 550,000 barrels of light sweet crude oil. Unloading just one of this tankers cruising in the gulf will drop oil to $30 bbl.
A GP tanker can carry between 70,000 barrels and 190,000 barrels of motor gasoline (3.2-8 million gallons) and an MR tanker can carry between 190,000 barrels and 345,000 barrels (8-14.5 million gallons). Have someone report the GIS location of the several tankers that are not in port to be unloaded and be counted by API and EIA inventory. No one is talking about this on the networks.
they are just circling like cruise ships until oil hits $50 bbl to they can be unloaded and finally included in the oil inventory numbers. Amazing that the very people that benefit from higher oil prices are the ones the market depends on to report inventory numbers that drive the increase in oil prices.
Is because they know that the inventory numbers that are a result of their own reporting have doubled the price of oil over the last 3 months. With the trend firmly moving towards $60 bbl and momentum players following the trend, oil stocks are poised for a 10% correction as the oil tankers that were ordered to stay out of port are called back in to refill the empty oil reservoirs. You cant make this stuff up.