All time high... the energy in this oil will power more domestic production in China no place else it can go.
China supposedly "collapsing" yet oil imports at all time highs... @AndrewSErickson @batchelorshow pic.twitter.com/mADRj2mqgm
— FrankfurtFinanz (@FrankfurtFinanz) February 1, 2016
7 comments:
I believe China is taking advantage of low oil prices to fill its strategic reserves. So yes, there is someplace the oil can go other than production.
China Filling Reserve With Cheap Oil
Anybody with any sense would be stockpiling now. After all what you are doing is moving it from Saudi to your country and you can then 'mine' that in the future.
The Chinese seem to have a much better geo-political strategic grasp than the Russians. I strongly suspect that the 'debt bubble' will turn out to be no such thing - because of course for there to be a debt bubble collapse the banks have to call in loans and demand interest. If instead the bank staff are state supported then there is no need to do that. You just keep right on pushing the monetary flow while sorting out misallocation the old fashioned way (concrete boots).
The West assume China is playing the West's game. I'm not so sure they are.
Stockpiling is what's happening now. The buzz is declining storage opportunities with storage facilities filling up and all available tankers rented. Then storage has to be expanded to accommodate the increasing desire.
If there is storage Neil... we are pretty full up in the US:
(I'm personally witnessing miles long crude rail cars (3 that I know of) pushed way back up into the Delaware River basin over the fall and winter here)
https://www.eia.gov/petroleum/weekly/
You can see we are already way ahead of the seasonal storage range about at previous max...
Not much room left around here anyway...
Most of the stuff coming out in the US and West in general about China and Russia is wishful thinking or propaganda.
Three things are happening in China.
1. Managed economy as previously.
2. Continued and expanded steps to counter the longstanding US policy of containment and encirclement that is being stepped up since the pivot to Asia.
3. Adoption of enough Western trappings to become a credible member of the global economy on the way to eventually being the dominant economic force.
China is the only country which has been building oil storage facilities during 2014-2015 significantly (take in mind, storing oil as opposed to gasoline is not easy/the best thing).
When the current outstanding facilities are full producers won't have any other option that cut down production, we cannot swallow oil... regardless of cash flows (they are going broke, that's why they keep pumping, out of sheer desperation), there won't be buyers left.
Also the appetite to finance the operations (or participate in them, like Morgan Stanley) from banks may be coming to an end (is draining already).
How do I stockpile on oil. How do I own a barrel.
Is the best way to buy into an oil fund through ETF's
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