Friday, January 23, 2015

EIA: US Oil inventories at 80 year high


Coverage of EIA's weekly petroleum report here at HSN.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 10.1 million barrels from the previous week. 
At 397.9 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years. 
Total motor gasoline inventories increased by 0.6 million barrels last week, and are well above the upper limit of the average range.

Probably fair to say that inventories are up...  ;)


15 comments:

Ignacio said...

"Probably fair to say that inventories are up."

"I would say that this report is less bearish than the December reports, but perhaps not even neutral, and certainly not bullish."

Are you sure you haven't been infected by the 'analyst' disease? The language seems to be indicative of such disease! Visit the closest doctor asap before you convert into "zombie economist"!

Jokes aside, yeah seems fair to say that inventories are up. The fracking people must be feeling the heat, as well as Russia and Venezuela. The problem though is the alternative technologies suffering from the over-flooded oil market and the low prices, as this could be a hit of several year (which would make it worse in the long run).

Ryan Harris said...

Where are the peak oil guys now? Gregor McDonald? EIA? All those scientific and economic models from investment banks, military reports, and political activists? I wonder if they still are thinking peak oil?

They must be hiding under a rock with the hyper-inflation guys just waiting until next year, when they will be vindicated.

Los Locos. Sadly I expect the most important economic lesson about natural resources will be completely lost because they don't want to understand that humans make resources valuable, resources don't make humans valuable.

Matt Franko said...

I, ha! I should have put a ;) after the last line there.. I think inventories are off the charts literally. .. not so sure on the steel this is the first report in a while that you dont have to take Prozac immediately after reading... I would be interested in detecting a turn there as early as possible .... but honestly it sounds like sell-side bluster for now... need to see next month...

R, Ive heard they are injecting liquid nitrogen and boosting pressure to get even higher yields.... storage is filling up.... above ground ;)


Ignacio said...
This comment has been removed by the author.
Ignacio said...

Well before everybody self-congratulates about low oil prices and how this is a victory of mankind over nature and thermodynamics I would like to know what oil prices obey exactly to?

To supply and to demand, primarily, demand is dropping, but why exactly, there are many factors one is technology the other is economic activity or social trends (some good, some bad). Oil futures have never been indicative of underlying fundamentals necessarily as there is a lot of financialization and colatelization that mandates over futures (may be the reason some banksters are bearish as it was pointed somewhere else). Neither when it was above 110USD just a few months ago, or when it was around current prices in 2008 ;)

These huge swings are not justified by fundamentals, neither when they are high or when they are low, and the volatility is just as dangerous as a high price. I would self-congratulate when the price cannot be used as a geopolitical weapon and oil can never achieve depression-inducing prices because it can be completely substituted.

Until then, I would relax the cheering and name-calling, following the analyst-doublespeak Matt has recently been using ;)

Been here, done that, since the mid 70's... (not actually as I wasn't even born heh, but, you get the point).

Ryan Harris said...

It is a victory because as humans were faced with "peak oil" they adapted and increased production, improved efficiency and invented better alternatives. The same thing that humans always do. Short of an asteroid impact or other instantaneous calamity, it's almost as if humans are designed to survive in and adapt to the environment where they live, laws of thermodynamics not withstanding.

Matt Franko said...

I,

I think Warren has been correct with his view on "OPEC as price setter" for a while but their influence is waning short term here as N.A. has added about 5M bpd over the last few years... this is about half Saudi production...

We cant do cartels here in the US so the new production can always lower the offers as it comes on line to make sure the new production is sold...

Retail is also changing over here.. to independents with 16 pumps... deli and coffee, snacks, etc...

.... also, we have had to work on rail infrastructure which is just now in place to the refiners and cant get the pipeline projects going at all yet... the Rails are probably donating USD balances to the tree-huggers accounts to get the pipelines put off thru politics... and the stuff is already stored in the ground in the first place...

The whole f-ing thing is a scam top to bottom I'd like to see them all in jail.

I'd rather drive off of hydrogen or electricity produced by regulated utilities myself... but it still costs too much for the alt. fuel vehicles over here...

Somebody has to produce an alt. fuel vehicle that blows away current TCO (Total Cost of Ownership) and they could clean up... I dont think Tesla is doing that those things are expensive... seems like they just went after the fuel costs which are now falling anyway...

You have to collapse TCO (including maintenance)... imo current autos are "too complicated"... electric drive motors are much simpler and dont need transmissions, etc...

Anyway I'll take the price reductions at the pump for now that is all we get short term...

rsp,

Malmo's Ghost said...

Peak oil isn't the end of oil, rather it's a production plateau. Given its finite quality, at some point in the future production will peak.. The plateau could be in ten years, plus or minus ten years. Global growth will have a lot to say about timelines.

Spare capacity is the bigger issue; bigger than inventory numbers for sure. It now hovers around the 2mbd range. Only a decade and a half back it was in the 14-15mbd range.

Also, light sweet crude has already peaked globally. Enjoy the cheap oil while it lasts.

Ignacio said...

Agreed on the short term is world wide stimulus. I read somewhere (think was Bill Mitchell blog) a comment that said that "oil prices benefit some but also hurt producers". Yeah, they do, but which part of the global population are consumers vs. producers, and is not like the producers income distribution is not skewed towards the dictators, corrupt regimes and CEO's lol.

Anyway, substitution will be hard with this prices, the problem is not the technology per se but the infrastructure to support the technology. Politicians will keep coming with stupid programs to help promote the oil-driven economy and this is not helpful.

As always we can take current prices as an opportunity, but in a free-market (what the hell is supposed that word to mean anyway, I never understood it as it's so devoid of significance in the real world, specially when applied to oil) driven world where everything is supposed to be magically fixed by current pricing unfortunately the opportunity will be wasted and we will see a comeback of wasteful SUVs, stupid urbanization, etc.

P.S: You have to check though that lower prices are not globally spread, ie. in Europe the translation of lower oil futures price translates only tangentially to street prices. It helps a lot, but the stimulative effect is not as big in USA.

Ryan Harris said...

Have you read the geology journal articles from the 1930s, Malmo, you are in good company on these views. They were saying the same thing, back then. About 10 years.

Malmo's Ghost said...

Ryan,

Folks were saying its the end of oil in the 70's. I get that. Hubbert never said that, however, and neither have any peak oil prognosticators I've ever read. And, sure, efficiency and extraction technology have improved, but where there's efficiency there's also Jevon's Paradox looking right back at it.

We're far from a world where liquid fuels don't matter. A growing populace intent on wanting to live just like us American's only exacerbates the problem. This isn't the 1930's.

Ignacio said...

Objectively oil-price is mean-reversing to the trend since the early 00's. Which are slighting rising oil prices.

Oil supply has also gone slightly up. When accounted for inflation the prices are relatively stable (but then again those prices are culprit of inflation in the first place, so while many goods are becoming cheaper and margins squeezed this wasn't happening in oil as a global trend), but the volatility trend since the mid 00's tells a different story (IDK which, yet, but a different story regardless. I would blame Wall St. games on it primordially).

In the end is a matter of demography, I'm relatively optimist in that frond as long as religious zealots don't ruin the world like they have done other times.

As for 'end of the world', sure there are 'peak oil theorists' that were/are in that camp, but not the most serious ones IMO. Even looking at colossal disaster levels and worse-case scenarios human population would probably never drop more than a 30-50%, and we have gone thought periods of history were similar things have happened before. I doubt anybody is talking extinction level, but a new meta-equilibrium (get familiar with the concept of metastability if you have some time). There are many ways of 'adapting' to a situation, and a lot of them have to do with dropping into a new 'meta-equilibrium'. OFC in practice that would be a lot of human suffering etc. and if that was to happen, it would be better to avoid it.


On a general level the world has become relatively stagnant the last 20 years as progress cannot keep up with demographic trends and regional problems. Maybe we have the next revolution just ahead, and that has to be related with energy. That along continued electrification and stabilization of population growth would be very bullish for humanity in the long run.

mike norman said...

To Ryan's point, I don't see much whale oil being used anymore. ;)

Matt Franko said...

If we converted over to a policy where we would drop in a couple of GBU-10s every time there was an OPEC meeting I think oil prices would generally be much lower...

Bob said...

Peak oil was always about the shape of the curve. Why they insisted on using a standard distribution curve to predict future oil production is beyond me. That was the first clue that these enthusiasts had zero credibility.