While talk of record backlogs of supertankers and an unprecented 3 billion barrels of crude oil stock-piles sound impressive – and are weighing on crude prices – the following stunning image provides some context for just what this means…
If the 3 billion barrels of crude oil gluttiness was put into tankers, the line would reach a stunning 530 kilometers…
Source: @JavierBlas
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As we previously noted, via Bloomberg,
Oil stockpiles have swollen to a record of almost 3 billion barrels because of strong production in OPEC and elsewhere, potentially deepening the rout in prices, according to the International Energy Agency.
This “massive cushion has inflated” on record supplies from Iraq, Russia and Saudi Arabia, even as world fuel demand grows at the fastest pace in five years, the agency said. Still, the IEA predicts that supplies outside the Organization of Petroleum Exporting Countries will decline next year by the most since 1992 as low crude prices take their toll on the U.S. shale oil industry.
“Brimming crude oil stocks” offer “an unprecedented buffer against geopolitical shocks or unexpected supply disruptions,” the Paris-based agency said in its monthly market report. With supplies of winter fuels also plentiful, “oil-market bears may choose not to hibernate.”
Total oil inventories in developed nations increased by 13.8 million barrels to about 3 billion in September, a month when they typically decline, according to the agency.
The pace of gains slowed to 1.6 million barrels a day in the third quarter, from 2.3 million a day in the second, although growth remained “significantly above the historical average.” There are signs the some fuel-storage depots in the eastern hemisphere have been filled to capacity, it said.
And the backlog of SuperTankers continues to surge – to record highs for this time of year…
31 very large crude carriers head to U.S. ports, highest since last May and most for time of year in data going back to 2013, ship tracking information compiled by Bloomberg shows.
Frontline agreed with Ship Finance International Limited to terminate the long term charter for Suezmax tanker Mindanao, and will receive a compensation payment of approximately $3.3 million from Ship Finance for termination of current charter
Following this termination, the number of vessels on charter from Ship Finance will be reduced to 14 vessels, including 12 VLCCs and two Suezmax tankers
The stock buffer is bearish and will probably set a lid on how much higher prices can go in 2016,” Torbjoern Kjus, an analyst at DNB ASA in Oslo, said by phone. “There’s a sizeable risk that we could run totally full,” in terms of storage capacity, he said
onlooker on Fri, 20th Nov 2015 7:06 pm
No mention of why we have this oil glut. That countries economies are so sluggish that they can not afford the oil. Also, that the low price will create a backlash as producers will inevitably slow or stop production and some even go out of business. So yes their is oil but not for everyone and at a price too low to maintain continuous high supply.
Plantagenet on Fri, 20th Nov 2015 7:24 pm
We have an oil glut because the supply of oil exceeds the demand. The oil glut has already chopped 60% off the cost of oil, and still there is oversupply. Most likely the price of oil will fall even farther.
Cheers!
bug on Fri, 20th Nov 2015 7:41 pm
Couple of days ago, rockman posted that we really do not have a glut. Plant says we have a glut. Whom to believe?
onlooker on Fri, 20th Nov 2015 7:49 pm
So we are agreeing Plant that the glut is based on low demand.
Apneaman on Fri, 20th Nov 2015 7:49 pm
We have a retard glut because the supply of retards exceeds the demand. The retard glut has already chopped 60% off the IQ of retards, and still there is oversupply. Most likely the IQ of retards will fall even farther.
Cheers!
bs on Fri, 20th Nov 2015 7:58 pm
zerohedge is short on oil.
Boat on Fri, 20th Nov 2015 8:23 pm
onlooker,
Sure you can believe that if over a million bpd every year in growth is not growth. The doomer argument. Even with this growth the storage tanks around the world are still filling up. You can think geeze there is a growing market with low prices and growing storage. Or geeze what will the spinners come up with next.
twocats on Fri, 20th Nov 2015 10:16 pm
zerohedge is short on the global economy. they’ve painted by far the clearest pictures of any source out there about the huge disconnect over the past years between the stock markets and the actual living breathing world economy. when it comes to peak oil itself they are agnostic (i’ve gathered), though they accept any and all forms of doomer porn.
Pennsyguy on Fri, 20th Nov 2015 10:50 pm
Declining economies=temporary oversupply
of some commodities.
Oversupply = eventual curtailment of
mining and drilling.
Econ. collapse = resources unused for
ever.
Business as usual WILL provide cornucopia
on a finite planet–sort of.
Ralph on Sat, 21st Nov 2015 1:13 am
So the unprecedented glut of stored oil will keep the entire human population supplied with 35% of its total energy needs for 5 weeks…
GregT on Sat, 21st Nov 2015 2:21 am
@Boat,
Stop playing the idiot already. It’s far beyond ridiculous.
Davy on Sat, 21st Nov 2015 6:46 am
Part of my doom message is the financial system. The financial system is the near term danger to collapse. The reason I say this is food and fuel. Both these vital foundational variables require globalism and all its attributes to deliver copious quantities to an energy hungry and thirsty system. The financial system we have today is the only way these two foundational variables will be delivered at the level and rate necessary to support 7BIL people and their way of life. I challenge anyone to disproving this.
The reason I say this is our current system is irreversible in complexity without a catastrophic bifurcation. A catastrophic bifurcation will drop the complexity needed to deliver food and fuel to a much lower level that will be far too low to support 7BIL people and a global system. The global system will shut down, decay, and become regional or local with such a bifurcation. There is no other alternative to what we have today with all the major institutions, networks, and support systems. These have self-organized by billions of individual decisions and relationships of 7BIL people spanning the entire globe.
There is no way to manage this system into something new except by slow evolution following a growth and development path that battles and wins the species war against entropic decay. We are obviously in the neighborhood of limits to growth so forced change is near and can be argued is now as a beginning process. We cannot reinvent a smaller copy of what we have now. We cannot reinvent a better design. This is it!
We cannot manage a degrowth into something smaller and something different. No nation can decouple from this system and survive. The global cannot survive with the loss of a vital cog in the wheel. These vital cogs are all the major powers and all the major resource suppliers that are part of this irreversible and must grow system.
What we can do is manage ourselves into a crisis of change that is a jump into the dark with some control. This crisis is happening now by force but disguised by subtleties of change and deception of understanding. We can add to our fall positive human attitude. We have some low hanging fruit of change that could buy us some time. We still may have some adequate time for change with climate change. No, we are climate screwed but we still may have some normal life before catastrophic climate effects render life unrecgnizable. We still have copious quantities of many resources if we stop blowing through them at an unsustainable rate. The unfortunate and inconvenient reality is descent will turn random and unstoppable once in full on mode. It will contain economic abandonment both rational and irrational. We will see dysfunctional results with policy and social systems. It will be TEOTWAWKI.
We must also acknowledge a new paradigm of population decline with more deaths over births. Just like energy is a central theme of economy so is food a central theme of population. When you have economic and oil resource decline you will have food system decline. Food system decline is population decline. We can slow that horrible decline by movements back to the land but not by much. Initial collapse could very well only allow 1960’s population of half the current. That carrying capacity number will drop steadily because of multiple converging negative feedbacks. How quick that happens should be our concern as caring humans.
Time frame is our unknown. How many years will this collapse process paly out? Will it be an event or a slow death? I feel it is impossible to tell because our global system’s problems are like the weather with far too many variables. We are talking human nature also. If our macro human nature chooses more good choices over bad choices we may have a chance for a longer softer emergency instead of a hard collapse.
What will likely happen is a cascade of poor choices that leads us to dangerous territory before reality smacks us in the face. The segment of the population that runs things will have to be forced into hard choices with no more can kicking and pretending. I firmly believe the top understands the problems but they are still deceived by the exceptionalism modern humans feel. TPTB fail to connect the dots of catastrophic collapse of a global system will destroy exceptionalism. I feel the power that are understand our system is going to collapse with large scale loss of life but their view is this collapse will happen in a way that is status quo and has continuity.
Exceptionalism is intoxicating. Power is intoxicating. No one at this level and as a group wants to believe that a collapse like we have coming will strip these powers bare. Knowledge and technology will quickly decay under the wrong circumstances but the powers that are believe they can maintain it if only for a select few of a smaller population. Collapse is about an energy and activity gradient. We should be concerned with how fast we descend this gradient and how far we go before we can adapt to a level that is more sustainable.
rockman on Sat, 21st Nov 2015 12:50 pm
looker – “That countries economies are so sluggish that they can not afford the oil.” And such statements completely confuse me: how can you say the economies are sluggish and can’t afford to buy oil if those very same economies are today buying more oil then ever before? The reality is completely contradictory to what you just said.
Bug – You don’t have to believe me or the plant. I assume you have basis math skills. LOL. Can you compare how much oil is being consumed today then 12 months ago? The numbers are just a few clicks away from the EIA website: you don’t have to take anyone’s word for the stats. So then it comes down to how you define a glut. Is it (A) when there is more of a product in the market place then there are buyers? Or maybe you think a glut is (B) when there’s so much commodity being made available the price has to be reduced to bring new buyer into play…new buyers that couldn’t afford the commodity when prices were higher?
But if you pick (B) let me explain what you would be implying: when oil hit $145/bbl some years ago producers had to drop prices to allow more capable buyers into the market place, right? As a result prices fell to around $100/bbl. So if what has happened in the last 12 months represents a
glut” to you then you’re also saying we had a “glut” of oil when it was selling for $100/bbl, right? After all you describing identical dynamics underway when oil is $45/bbl and $100/bbl.
IOW you don’t have to believe any sh*t anyone throws at you IMHO: the situation should be easy enough for you to figure out.
Again the simplicity of the current situation: almost every bbl of oil being produced today is being CONSUMED today. (99.5%+ in the USA in the first week of this month). That is not a “glut” IMHO. And no: the gains we’ve been seeing in storage are completely insignificant compared to consumption. Numerous reports have been posted here showing just that. And again you don’t have to believe me: the EIA data will tell you exactly the same. BTW that’s exactly where my 99.5%+ USA consumption came from.
The supply/demand dynamic is not a matter of OPINION…it hangs on actual FACTS that are available from folks like the EIA.
onlooker on Sat, 21st Nov 2015 1:13 pm
Okay thanks for the correction Rock, always ready to listen to the knowledgeable folk like yourself.
rockman on Sat, 21st Nov 2015 5:02 pm
looker – I think I’ve realized the root of much of the debate while responding to you. I’ve said it before but let me put it differently. Folks arguing there is an oil glut are correct: or would have been if they pushed that position a year ago. All numbers from the EIA:
During 1Q 2014 global liquid petroleum consumption averaged 91.4 mm bbls/day. By 3Q 2015 it averaged 94.7 mm bbls/day. The price slide began during 2014 because at higher prices there was a glut…of oil at those higher prices. But that matches the point you made: sluggish economies can’t afford higher priced oil. But fortunately virtually every oil seller, particular the KSA that is so dependent on TOTAL oil sales revenue, is more concerned about their revenue stream then what they can changed PER BBL OF OIL. So you are correct but more specifically the economies can only afford to pay what they can pay for oil whether they are sluggish or booming.
The US consumers could have continued paying for the same volume of oil consumption at a higher price…maybe even what is was before the price slide. But not all the economies could.
A simple comparison: I could afford to pay $45k for the Kia Sorrento I paid $23k for. But I wouldn’t because I had other more reasonably priced options. But if those options didn’t exist I could afford to pay $45k. So why doesn’t Kia charge $45K: because they need to generate a certain minimum revenue which they couldn’t do selling a lot fewer Sorrentos at a higher price. And if they did raise the price to $45k tomorrow guess what: there would suddenly be a glut of Sorrentos.
And to support your point: if all the oil producers colluded and raised the price to $100/bbl we would have a glut of oil…probably a huge glut.
Which is just one more long-winded of saying that the pricing dynamics balances supply and demand: one can’t sell enough oil at a price TOO MANY buyers can’t afford (as we saw in 2014). But buyers can buy more oil (as we see today) if prices are lowered. And producers, like the KSA, can only increase their revenue at the lower prices by selling as much as possible. Which is exactly what we see today IMHO.
makati1 on Sun, 22nd Nov 2015 5:06 am
rockman, really! The EIA as a reference for facts? The only fact is that they are government run and paid for. I guess you believe the 5% unemployment stats also and the low, low inflation and the growing US GDP and …? Too bad.
I respect your experience and intelligent but not your source of info. No government publishes real numbers these day. None. It is all propaganda to support the bullshit of the day.
rockman on Sun, 22nd Nov 2015 8:33 am
mak – I do get your valid point. But do you have a source for as much info as is available on the EIA websites? And a source that more universally accepted? I didn’t say the IEA was a perfect data source or even a good one. But it is the best and most accessible data source out there IMHO.
A suggestion for another source would be greatly appreciated, you wild ass rebel. LOL.
Amvet on Sun, 22nd Nov 2015 9:13 am
The developing world uses over half of global oil. The US and the Saudis want low oil prices to damage Iran and Russia. Sending a string of tankers to the US to prop up the fake global oil production is a definite possibility.
makati1 on Sun, 22nd Nov 2015 8:24 pm
rockman, no I do not. And there is the pity. Truth and facts are almost extinct. I do not believe anything that comes from a government or a government sponsored think tank. Unfortunately that is where 99% of today’s’ info comes from. And no country is immune to that need to lie.
I put some trust in personal observation that has been gained by a lifetime in that profession. That is why I read your comments and use them to judge what I see in the ‘news’. I have no financial connection to oil other than using the products made from it. I was in construction for most of my life and my experience is in that field. I can answer a lot of questions about that but do not pretend to know much about the oil industry. Thanks for your ongoing tutoring of us all. ]
BTW: I prefer “wild assed rebel” to some of the things I have been called here by less intelligent folks. It does seen to fit. LOL