Reuters: "World refiners are CLOGGED with oil"
Posted: Mon 22 May 2017, 15:37:43
NEW YORK/LONDON/SINGAPORE After the first OPEC oil production cut in eight years took effect in January, oil traders from Houston to Singapore started emptying millions of barrels of crude from storage tanks.
Investors hailed the drawdowns as the beginning of the end of a two-year supply glut - raising hopes for steadily rising per-barrel prices.
It hasn't worked out that way.
Now, many of those same storage tanks are filling back up or draining more slowly than investors and oil firms had expected, according to global inventory estimates and more than a dozen oil traders and shipping sources who told Reuters about storage in facilities that do not make their oil volumes public.
"CLOGGED" WITH OIL
From the Malacca Straits in Asia to the ports of Northern Europe and the Gulf of Mexico, drawdowns of global inventories have slowed or even reversed.
In the Amsterdam-Rotterdam-Antwerp (ARA) region – one of the most expensive areas in Europe to store oil and the benchmark pricing point for fuel - crude is starting to flow back into storage because refiners are "clogged" with oil, an industry source handling deals in that region told Reuters.
Refined fuel inventories have also jumped suddenly, with gasoil in tanks in the ARA hub rising to an eight-month high earlier this month, according to Dutch consultancy PJK International. Gasoil includes jet fuel, diesel and heating oil.
At one of the world's largest oil storage facilities - on the shores of Saldanha Bay in South Africa - millions of barrels were sold in recent months, traders told Reuters.
But more cargoes are flowing right back into its tanks, which can hold 45 million barrels, as sellers struggle to find refiners to buy freshly loaded oil, the traders said.
In the Houston region, stored oil stocks touched record levels at the end of March, according to energy information provider Genscape.
The state of inventories appears more mixed in Asia.
In China, the world's second-largest oil consumer behind the United States, commercial crude stocks hit their lowest level in four years in March, according to the government-controlled Xinhua News Agency. But in nearby South Korea, inventories were near a record, according to the Korea National Oil Corp.
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https://www.reuters.com/article/us-glob ... SKCN18F0EO
THIS plus the following:
Goldman Warns Of "Sharp Oil Price Drop", Inventory Glut "If Backwardation Is Not Achieved"
"we now forecast that deferred prices will need to decline with 1- to 2-yr WTI forwards of $45/bbl. This leaves us expecting high total returns for being long oil, delivered through backwardation, but recommending that producers increase their hedge coverage. If backwardation is not achieved, however, we see risks that prices fall sharply next year as OPEC reverts to growing market share through volumes."
http://www.zerohedge.com/news/2017-05-2 ... t-achieved
If you pay attention, this is the picture which has been accurately described by Steve Ludlum and BW Hill.
Impressive.
Investors hailed the drawdowns as the beginning of the end of a two-year supply glut - raising hopes for steadily rising per-barrel prices.
It hasn't worked out that way.
Now, many of those same storage tanks are filling back up or draining more slowly than investors and oil firms had expected, according to global inventory estimates and more than a dozen oil traders and shipping sources who told Reuters about storage in facilities that do not make their oil volumes public.
"CLOGGED" WITH OIL
From the Malacca Straits in Asia to the ports of Northern Europe and the Gulf of Mexico, drawdowns of global inventories have slowed or even reversed.
In the Amsterdam-Rotterdam-Antwerp (ARA) region – one of the most expensive areas in Europe to store oil and the benchmark pricing point for fuel - crude is starting to flow back into storage because refiners are "clogged" with oil, an industry source handling deals in that region told Reuters.
Refined fuel inventories have also jumped suddenly, with gasoil in tanks in the ARA hub rising to an eight-month high earlier this month, according to Dutch consultancy PJK International. Gasoil includes jet fuel, diesel and heating oil.
At one of the world's largest oil storage facilities - on the shores of Saldanha Bay in South Africa - millions of barrels were sold in recent months, traders told Reuters.
But more cargoes are flowing right back into its tanks, which can hold 45 million barrels, as sellers struggle to find refiners to buy freshly loaded oil, the traders said.
In the Houston region, stored oil stocks touched record levels at the end of March, according to energy information provider Genscape.
The state of inventories appears more mixed in Asia.
In China, the world's second-largest oil consumer behind the United States, commercial crude stocks hit their lowest level in four years in March, according to the government-controlled Xinhua News Agency. But in nearby South Korea, inventories were near a record, according to the Korea National Oil Corp.
------------------
https://www.reuters.com/article/us-glob ... SKCN18F0EO
THIS plus the following:
Goldman Warns Of "Sharp Oil Price Drop", Inventory Glut "If Backwardation Is Not Achieved"
"we now forecast that deferred prices will need to decline with 1- to 2-yr WTI forwards of $45/bbl. This leaves us expecting high total returns for being long oil, delivered through backwardation, but recommending that producers increase their hedge coverage. If backwardation is not achieved, however, we see risks that prices fall sharply next year as OPEC reverts to growing market share through volumes."
http://www.zerohedge.com/news/2017-05-2 ... t-achieved
If you pay attention, this is the picture which has been accurately described by Steve Ludlum and BW Hill.
Impressive.