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Page added on August 10, 2016
Global glut of oil products
Gasoline and diesel stockpiles have swollen to record highs across the globe, leaving refiners and traders few places to dump excess supplies and threatening large-scale production cuts that could derail an oil price recovery.
Typically, U.S. and European refiners deal with excess regional inventories by exporting extra supplies to markets where margins for diesel, gasoline, or other oil products remains strong. However, months of above-average global refinery utilization rates and the addition of refining capacity globally has left storage tanks from Houston to Singapore full to the brim.
While the crude market has been plagued by world oversupply for two years, a global glut of refined products is a relatively new phenomenon, a result of refiners boosting production last year and early this year to cash in cheap crude supply and hefty margins.
Now the only choice refiners have is to cut production, most analysts and refinery executives say, a process that some refiners in the U.S. and Europe have already started. That in turn, at least in the near-term, will weaken demand for crude oil and serve as a hard ceiling on prices.
Brent crude, the global benchmark, reached a six-month high of $52.51 a barrel in June spurring talk of a sustained oil recovery, but fears that excess global product inventories would sap demand for crude helped push prices back towards $40 earlier this month.
“Unless and until inventories drop, we will not see a sustainable increase in crude prices,” Mark Routt, chief economist for the Americas at KBC Advanced Technology in Houston, said on Monday. Routt said he did not expect the market to rebalance until mid-2017.
In a note on Monday, Morgan Stanley analysts noted that the recent dip in oil prices has in fact boosted refining margins, encouraging refiners to produce more and delaying output cuts.
For most of this year, refining margins have been weak, driven down by swelling inventories, pummeling the earnings of independent refiners, such as Valero and Marathon Petroleum along with oil majors like ExxonMobil and BP.
U.S. gasoline inventories, which hit record highs earlier this year, ended last week at 238 million barrels, 5 percent above the five-year seasonal average, according to the U.S. Energy Department. U.S. inventories of distillates – kerosene, jet fuel, diesel and other products – were 36 percent above the five-year seasonal average at 153 million barrels.
European oil product stocks are also high at the Amsterdam-Rotterdam-Antwerp (ARA) hub. Gasoline in independent storage is up more than 17 percent from a year ago near records at 1.16 million tonnes, according to PJK International. [ARA/]
Distillates stocks in ARA are up 2 percent from last year at 3.27 million tonnes, with some traders storing them on vessels outside European ports. In Germany, the continent’s largest diesel market, consumer inventories in early July stood at a seven-year high for this time of the year.[PROD/DE] (Graphic:tmsnrt.rs/2b0P2oR)
While there is no data to gauge the Asia’s fuel inventories, industry sources say they are also high. In Singapore, the region’s main crude and refined products trading hub, most onshore inventories run at or near record highs, with floating tanker storage deployed to cope with the supply overhang.
“No one consumes crude, they consume products,” said a Canadian refinery executive. “Until we see those inventories come down, it will be real difficult for crude to have a strong rally again.”
Refiners can react to market conditions more quickly than drillers, so run cuts can more quickly balance out excess product supplies, Goldman Sachs analysts said Tuesday. They expect global refinery maintenance to be above the five-year average in the third quarter but to return to normal levels for the remainder of the year.
Routt said Asian refiners including Japan, South Korea and even oil-thirsty China, keep exporting excess fuels overseas, adding to the glut. China on Monday reported record refined product exports just as its industrial and manufacturing sales took another hit, the latest sign of weak growth in Asia’s biggest economy.
He said the biggest victims of the global supply glut will probably be European and Russian refineries, who will be forced to make the deepest production cuts.
“China will not back down, and I don’t think America will either, that leaves Europe and Russia,” Routt said.
34 Comments on "Global glut of oil products"
Dredd on Wed, 10th Aug 2016 8:07 am
The global oil slut (Oil-Qaeda: The Indictment – 6).
Queen Jane Approximately (Proxymetry3 – 6).
penury on Wed, 10th Aug 2016 9:37 am
As noted here before, people have no money. Factories close, commerce declines,shtf. A strong dollar creates havoc with EMs (oil is priced in dollars?) borrowing dollars becomes too expensive, Refer to sentence one.
Kenz300 on Wed, 10th Aug 2016 10:16 am
The world is changing……….
Fossil fuels are poisoning the planet………the world is moving to safer, cleaner and cheaper wind and solar power………………
Renewable Energy Training Opportunities for Vets and Displaced Fossil Energy Workers –
http://www.renewableenergyworld.com/articles/2016/07/renewable-energy-training-opportunities-for-vets-and-displaced-fossil-energy-workers.html
Energy from Offshore: Engineering Firm Transitions Expertise from Offshore Oil to Offshore Wind –
http://www.renewableenergyworld.com/articles/2016/07/energy-from-offshore-engineering-firm-transitions-expertise-from-offshore-oil-to-offshore-wind.html
3 Sure Signs of Texas’ Emerging Solar Market
http://www.renewableenergyworld.com/ugc-content/2016/07/22/3-sure-signs-of-texas-emerging-solar-market.html
Kenz300 on Wed, 10th Aug 2016 10:19 am
Poverty and unemployment are the direct result of overpopulation……….yet the world adds 80 million more people to feed, house and clothe every year…….that is unsustainable……….
The Effects Of Growth: Sprawl & Development – YouTube
https://www.youtube.com/watch?v=UA33sraoyCk
denial on Wed, 10th Aug 2016 10:22 am
I know I am beating a dead horse here Ken but solar is not the answer…it is not feasible at this time and may never be to power the world. There is a mass manipulation if the media right now…how can you have 0 GDP in the States but then have great employment numbers? Something is not adding up
ghung on Wed, 10th Aug 2016 10:32 am
“… but solar is not the answer…”
That depends on what the question is. Power the world? It already does. Power human civilization as it is? Nothing can do that indefinitely.
MikeX11.2 on Wed, 10th Aug 2016 11:26 am
You get Max Fuel Economy at 40 MPH.
My Hybrid now getting 50 mpg at 40 MPH.
Save Up for a VOLT!
ghung on Wed, 10th Aug 2016 11:42 am
Around here you get run off the road at 40 MPH, along with the finger.
peakyeast on Wed, 10th Aug 2016 11:49 am
50 mpg = 21.25KM/liter at a snails pace..Is that supposed to be good?
My 16 y.o. diesel gets 3.6 liter/100km = 27.7 km/l = 65 mpg and that is at 110kmph – not 65.
And I do not have to buy batteries worth a new car every 10 years – with the risk of them dying anytime if I forget to baby and babysit them…
Dont get me wrong – I am all for alternatives to ICE. They just need to be viable.
Apneaman on Wed, 10th Aug 2016 12:08 pm
Kenz, you’re not all that different than Douchy you know. Oh yeah, except your racism and elitism is masked by liberal PC bullshit, whereas at least douchey is up front about it. You ever stop and think that it’s none of your fucking business what people in 3rd world countries do?
You know that George Carlin video where he talks about the arrogance of the humans and especially “white bourgeois liberals” and self righteous environmentalists who only really care about a clean space for themselves? – that you.
Human overpopulation is self solving, via a dieback or die off, same as all living things. It’s not up to the humans – they not in charge and will be gone soon.
George Carlin – Saving the Planet
https://www.youtube.com/watch?v=7W33HRc1A6c
Boat on Wed, 10th Aug 2016 12:12 pm
denial on Wed, 10th Aug 2016 10:22 am
“There is a mass manipulation if the media right now…how can you have 0 GDP in the States but then have great employment numbers? Something is not adding up”
0 gdp. Really? Is this an initiation test for an anti American group? Just blatently throw out shyt? lol
ghung on Wed, 10th Aug 2016 12:18 pm
Considering that US debt is 103% of GDP, and considering all externalities not counted in the official GDP calculations (backsliding on infrastructure, declining environmental capital, much more) it’s reasonable to say that real GDP is at, or below, zero. But go ahead and believe in faux growth. It’s magic!
Plantagenet on Wed, 10th Aug 2016 12:56 pm
The oil glut is likely to continue through the winter, making it cheaper for Americans to drive their giant SUVs to grandma’s house.
Thats assuming no nasty little war flares up in the South China sea.
Cheers!
PracticalMaina on Wed, 10th Aug 2016 1:09 pm
I figured out a screening process to see if someone is a close minded elitist corrupt narcissistic POS. Bush is the only exception as he did admit to smoking pot.
http://www.seattletimes.com/nation-world/clinton-trump-both-claim-theyve-never-smoked-pot/
denial on Wed, 10th Aug 2016 1:58 pm
I stand corrected boat, GDP for last quarter was 0.5…..but still if you take in debt spending it is much less….I don’t think I am just throwing out numbers here but correct me if I am wrong….I am just saying something does not add up….and the media is manipulating the truth…that GDP story I picked up on CNBC….
Boat on Wed, 10th Aug 2016 2:36 pm
denial,
If and when gdp drops to zero or below the government will report it. There is no conspiracy. You claim the media is manipulating the truth. What meida. Where is your link.
“If current laws remained generally unchanged, the United States would face steadily increasing federal budget deficits and debt over the next 30 years—reaching the highest level of debt relative to GDP ever experienced in this country”.
https://www.cbo.gov/topics/economy
The Congressional Budget Office dosent seem like their hiding facts.
ghung on Wed, 10th Aug 2016 3:14 pm
“The Congressional Budget Office dosent (doesn’t? contraction of does not?) seem like their (they’re? contraction of they are?) hiding facts.”
Manipulation of data may not seem like “hiding facts” to you, but it happens. As I suggested above, GDP figures are unlikely to be representative of the true state of things, here in the real world.
Boat on Wed, 10th Aug 2016 4:07 pm
ghung/grreggiet,
Their are hundreds of factors that are tracked to help fill in the gap for the “true state” of things. GDP was only designed to track a few of them. Google gdp history and learn all about it.
penury on Wed, 10th Aug 2016 4:07 pm
Hey, just a couple of question” What portion of GDP is Gov spending? How much do the on-going conflicts add to GDP? Do 9 million plus unemployed that are no longer counted add to or subtract from GDP?
Apneaman on Wed, 10th Aug 2016 4:35 pm
“Primers on Government Economic Reports
What you’ve suspected but were afraid to ask. The story behind unemployment, the Federal Deficit, CPI, GDP.”
http://www.shadowstats.com/primers-and-reports
JuanP on Wed, 10th Aug 2016 7:24 pm
Boat “If and when gdp drops to zero or below the government will report it.”
Your faith in the US government and the data it publishes is undeniable proof of your ignorance and lack of intelligence and common sense. I understood that governments lie when I was a small child. The fact that you still believe in your government’s lies is something that I find hard to believe.
How on Earth can a grown man believe in the US government? You must be incredibly naive or living in denial.
Rick Bronson on Wed, 10th Aug 2016 9:57 pm
Earlier a bigger part of the Crude oil is refined into Fuel Oil which is used for power generation and heating, but now a days, less crude ends up a fuel oil and more of it as motor fuels like gasoline & diesel since these fuels fetch a better value at market.
So there is a big glut of gasoline/diesel. And the glut will continue.
More refineries are getting advanced techniques to produce more of these motor fuels.
Here is an interesting company. They are producing G-Diesel which has 2/3 petroleum and 1/3 natgas in it.
http://www.clearrefining.com/
GregT on Wed, 10th Aug 2016 10:46 pm
The Trouble With GDP
Gross domestic product (GDP) is increasingly a poor measure of prosperity. It is not even a reliable gauge of production.
http://www.economist.com/news/briefing/21697845-gross-domestic-product-gdp-increasingly-poor-measure-prosperity-it-not-even
GregT on Wed, 10th Aug 2016 10:54 pm
“You claim the media is manipulating the truth. What meida. Where is your link.”
How the Media Manipulates You Without Your Knowing
https://www.psychologytoday.com/blog/unconscious-branding/201212/how-the-media-manipulates-you-without-your-knowing
Media Manipulation
“The media is manipulated in all manners, for example through professional public relations (PR), and covert and overt government propaganda which disseminates propaganda as news. What are often deemed as credible news sources can often knowingly or unknowingly be pushing political agendas and propaganda.”
http://www.globalissues.org/article/532/media-manipulation
And BTW Kevin, there are at least two of us posting here that studied corporate communications in University. Damn right the media is manipulating the truth.
derhundistlos on Thu, 11th Aug 2016 1:38 am
BAGHDAD — Record-shattering temperatures this summer have scorched countries from Morocco to Saudi Arabia and beyond, as climate experts warn that the severe weather could be a harbinger of worse to come.
In coming decades, U.N. officials and climate scientists predict that the region’s mushrooming populations will face extreme water scarcity, temperatures almost too hot for human survival and other consequences of global warming.
Washington post: https://www.washingtonpost.com/world/middle_east/an-epic-middle-east-heat-wave-could-be-global-warmings-hellish-curtain-raiser/2016/08/09/c8c717d4-5992-11e6-8b48-0cb344221131_story.html?tid=hybrid_experimentrandom_3_na
Cloggie on Thu, 11th Aug 2016 4:27 am
Has Richard Heinberg offered his apologies in public yet? Apparently the party is not over yet in 2016.
The folks of the oildrum.com knew when to call it a day.
Cloggie on Thu, 11th Aug 2016 4:37 am
My own former home base peakoil.nl is out of business and its former luminary Rembrandt Koppelaar is now in London doing consumer research:
https://www.researchgate.net/profile/Rembrandt_Koppelaar
I guess he wanted to start a family or something.
It was a grand story but it didn’t happen.
Davy on Thu, 11th Aug 2016 6:58 am
Cloggie, your type come and go. You drop in because of cognitive dissonance. You engage in debates here for a while than your type limp home or join us. There are very few hardcore PO and collapse deniers here that have lasted. Most who have lasted are psychologically impaired like Boat and Marmi. You have yet to offer anything of substance in your comments to refute PO and a collapse process.
marmico on Thu, 11th Aug 2016 7:22 am
Rembrandt has been a peripatetic dude since 2005. How many years does it take to get a Ph.D. in “the simulation of electricity firm decisions related to power plant investment and R&D with a focus on the German electricity market”?
Cloggie on Thu, 11th Aug 2016 7:38 am
Davy, I am not a PO or collapse denier, but I came to the conclusion that the ASPO2000-Heinberg crowd were wrong with their simplistic model. Every oil major CEO will confirm that by the end of this century oil will be gone. That’s not the issue. ASPO2000 was probably right about conventional oil but that is meanwhile irrelevant. Fracking could be only the beginning:
http://www.dailymail.co.uk/news/article-2593032/Coal-fuel-UK-centuries-Vast-deposits-totalling-23trillion-tonnes-North-Sea.html
Under the North Sea between Britain and Holland alone there is up to 23 trillion ton of coal reserves, dwarfing the amount of coal and oil burned in the entire history to date. This location is unlikely to be unique.
Of course you can’t mine this stuff, but perhaps you can burn it where it is, provided new technology could be developed. Perhaps Rockman has a word to say on this subject.
Should we do this?
Of course not, but that is not up to me or you.
The point is, it is absolutely too early to pronounce the end of the era of fossil fuel.
I lost interest in peakoil as a potential short term phenomena, but for collapse enthousiasts there is still a lot to observe, but in different realms: geopolitics, finance and social (dis)order.
Finance: I and many with expect a reset of the global financial system, eliminating the preeminent position of the dollar. Perhaps gold will regain its old role.
Geopolitics: the rise of China to super power status and the response of other existing powers to that fact.
Social (dis)order: the US promoted model of diversity is on the way out, potentially leading to civil war in both Europe and North-America.
That will happen long before “peakoil”.
Cloggie on Thu, 11th Aug 2016 7:53 am
@marmico – I visited a Studium Generale peakoil gathering in Delft somewhere around 2009, with Rembrandt giving a presentation. It was a good coherent speech… but in hindsight coherently wrong.
PracticalMaina on Thu, 11th Aug 2016 8:53 am
Cloggie, why would we spend the RnD money to release more incredibly expensive to obtain co2? Siberia and tundra everywhere will be offgassing quite nicely, why not try to capture and use some methane at high concentration areas to prevent them from being vented? The same could be said about the methane that results from agriculture, waste disposal, wasted flared gas at wells, there is abundant wasted hydrocarbons around us.
Davy on Thu, 11th Aug 2016 9:27 am
Clog, you miss the point of PO because it is more than PO. It is the approach to PO, abrupt climate change, and the deflation of a global economy. This is systematic and macro. It is all-inclusive and it is about scale of time and the physicals of quantity and quality. You are stuck in your 20th century Europeanism. European model is on the way out quicker than the American one. You proud people just can’t admit it. This is a good thing because it is the Europeans that brought about our possible and likely extinction. All the worst of what is a human “ism” started in Europe.
Kenz300 on Thu, 11th Aug 2016 12:14 pm
Electric cars, trucks, bicycles and mass transit are the future…..fossil fuel ICE cars are the past…………..
Think teen agers vs your grand father…………………. cell phones vs land lines…….
NO EMISSIONS……..climate change is real………and it will impact all of us and future generations
Save money……no stopping at gas stations…..no oil changes……..less overall maintenance……