Soaring US crude oil inventories.
Crude oil inventories in the US (excluding the Strategic Petroleum Reserve) rose by 10.1 million barrels to 397.9 million barrels during the week ended January 16, the EIA reported on Thursday. Inventories have now reached 397.9 million barrels, the highest level for this time of year in “at least the last 80 years,” or as far as the EIA’s records go back.
This chart by the EIA shows that current inventory levels (blue line) have been on a terrific upward trajectory that defies the 5-year range and seasonal movements.
These ballooning crude oil stocks will exert further downward pressure on prices.
What I’m scratching my head about is what these speculators are thinking when they’re leasing tankers to fill them up with “cheap” crude, waiting for the price to rise. Leasing a tanker is not free, unlike borrowing money overnight. And there are plenty of other costs and risks involved – including already ballooning inventories. Who the heck is going to buy all this crude out of storage when production is soaring faster than demand?
But their thinking has gotten a lot of press recently which makes me think that they’re trying to lure others into that trade for reasons of their own.
But there is a bitter irony: The plunge in the price of oil is pushing desperate drillers, buckling under their debt, to maximize production from existing wells while slashing operating costs and capital expenditures. BHP Billiton, perhaps unwittingly, explains this irony: despite the oil glut, collapsed prices, layoffs, and shuttered facilities, US oil production is soaring and will continue to soar, at least for a while. Read… Why the Great American Oil Bust Will Be Long & Painful
Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.
Many experts agree that metal roofs are a great defense against wildfires. Click here or call 1-800-543-8938 for details from our sponsor, the Classic Metal Roofing folks.
Classic Metal Roofing Systems, the leader in fire safe roofing for residential applications, manufactures products that are 1/20 the weight of most tile products and eligible for Class A, B, or C fire ratings as determined by roof preparation.