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Reuters: "World refiners are CLOGGED with oil"

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Reuters: "World refiners are CLOGGED with oil"

Unread postby Observerbrb » Mon 22 May 2017, 14:37:43

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.


------------------
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.
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby kublikhan » Mon 22 May 2017, 15:12:07

If you have been paying attention, you would know that 6 months of a mild cut are not enough to drain the abnormally high storage levels:

Dec 1, 2016 - The oil price rally sparked by an OPEC-Russia deal to cut output is likely to be short-lived, say traders in Asia, because the agreement may only draw more supplies from storage tanks and more crude shipments from the United States. And even without increased supplies from elsewhere, if the Organization of the Petroleum Exporting Countries (OPEC) and Russia do reduce production by 1.5 million barrels per day (bpd) as pledged, the cuts would not be deep enough to shrink a glut that began to build in mid-2014, traders said.

The OPEC deal "will provide some price momentum but it cannot be compared with the cut seen back in 2008," a Singapore-based trader said, referring to the last OPEC production cut at 4.2 million bpd.
Oil price rally likely short-lived as OPEC deal not enough to reduce glut

Before the cut was announced, OPEC drove up it's production levels to record highs. Then the cut merely brought levels back down to where they have been earlier. Such a mild cut was not deep enough to make a potent effect on storage levels.

DEC 07, 2016 - Oil prices slipped on Wednesday on persistent doubts whether a planned crude production cut led by Opec and Russia would be deep enough to end a supply overhang that has dogged markets for over two years.

Oil prices shot up as much as 19 per cent after the Organization of the Petroleum Exporting Countries (Opec) and Russia last week announced they would jointly cut production next year in an attempt to prop up markets. However, doubts have since emerged whether the planned cuts will be big enough to end oversupply. Since the deal was announced, both Opec and Russia have since reported record production. "The more Opec and Russia produce, the higher the starting point will be to have to cut from."
Oil slips on doubts that output cut will be deep enough to end glut
The oil barrel is half-full.
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby Observerbrb » Mon 22 May 2017, 15:25:52

If you have been paying attention, you will know that this situation has no precedent in the oil industry, always according to experts:

-------
Despite the recent dip in oil prices, industry experts have been predicting a supply-gap and rising oil prices for years. This is due in large part to an oil investment drought marked by two year of consecutive decline, a statistic that has no precedent in the oil industry. This year a report by the International Energy Agency concluded that if oil investment remains stagnant over the next few years, by 2020 we will see a significant increase in the price of oil as global demand continues to climb.

The potential supply gap has far-reaching implications that we are not ready to combat. Gas and oil are still fundamental to much of the world’s infrastructure, despite a steady increase of research and utilization of renewable energy resources. While electric cars continue to show a promising future, especially in the light of ambitious new green car policy initiatives in India and China, they still account for less than 2 percent of the world’s cars. And, as the global middle class continues to grow and exercise their buying power, the demand for oil will continue to grow alongside them.

The oil industry desperately needs new sources of oil, and they need new investors and technologies to find those sources quickly. There are currently a wide variety of techniques employed to find new deposits (seismic prospecting, well logging, gravity surveying, magnetic prospecting, and geochemical prospecting, etc.) but these are all methods with significant limitations in their ability to accurately estimate the size of new oil and gas deposits.

Many companies, including oil giant BP, have begun efforts to develop of artificial intelligence programs with algorithms that will allow them to find and drill with unprecedented accuracy in the future, but the technology is not yet ready. We can only hope that it will be ready by 2020 or that the IEA is wrong in their predictions.

http://oilprice.com/Energy/Crude-Oil/To ... -2020.html
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby pstarr » Mon 22 May 2017, 15:34:31

Observe IOW $50/barrel is not enough to stimulate E&P, but too damn expensive for the world's poor.

But that is all right, as the long country-club set that rules the US (and the rest of NATO) is comfortable, than we have no cause for alarm, nor will we ever even hear about it. But rest assured . . . they will continue to work behind the scene to control the world's oil . . . for themselves.
Haven't you heard? I'm a doomer!
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby kublikhan » Mon 22 May 2017, 15:46:47

Observerbrb, thank you for proving a point I have made several times now. This oil investment retrenchment will eventually cause the oil market to tighten up. Your sources are giving a date of 2020 or so for when this will happen. Care to take a guess on what happens when the oil market tightens up?

Oil markets continue to debate the vagaries of how much crude and refined products are stored in big white tanks and floating carriers. The feeling is that there is too much sloshing around. That’s why the oil price is under siege again, down 10 percent in the past three weeks.

Meanwhile, the untold story is at the front end of the supply chain. Fixating on inventories for any product is a narrow thought process. Think of it this way: There are no worries when there is plenty of food in the fridge; but unease about the future sets in when farmers stop planting their crops.

Global producers are broadly divesting of exploration activity at the same time as consumers are investing in 90 million new hydrocarbon-consuming vehicles each year. Inventories may be full for now, but nothing in the global drilling data is comforting about future oil supply meeting still-growing consumption.
Forget Inventories – Drilling Cutbacks Will Lead To Much Higher Oil Prices
The oil barrel is half-full.
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby Observerbrb » Mon 22 May 2017, 16:08:14

kublikhan wrote:Observerbrb, thank you for proving a point I have made several times now. This oil investment retrenchment will eventually cause the oil market to tighten up. Your sources are giving a date of 2020 or so for when this will happen. Care to take a guess on what happens when the oil market tightens up?


This is where we certainly disagree. I don't think the market will ever tighten up, and I think that the asset bubble courtesy of the CBs will eventually burst- This development will negatively affect the economy by causing a recession and maybe something worse, oil demand won't recover from this event but the opposite. Don't you think that real estate, virtual currencies, stocks and FANG are severely inflated? This is a complete madness. We have been down this road many times, that I presume that everyone here knows how it will end.

There are signs that some bubbles are starting to crack (one of them is the automobile sector in the USA), another one is Chinese demand. You can see some signs in some luxury property as well. Commercial and Industrian loans are stagnating - Do you know what happened last time they had this behaviour?

Image

Millennials living in their basement, low wages, household debt hitting a new historical record last week, US GDP growth only at 0.7% YoY despite the fact that Oil prices have collapsed, student debt skyrocketing and low interest rates are not causes of this Low Oil price environment, but the consequences of the depletion of the best quality reserves.

During these orwellian era it's like an anathema to talk negatively about the economy and what could happen if we continue with this absolute economic madness.

We better deal with reality and take one step back, to take two steps forward later, or something sinister is going to happen - and soon.
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby ROCKMAN » Mon 22 May 2017, 16:24:57

Actually US refineries store little oil beyond the "working volume" they are in the process of cracking. But having said that the refineries aren't "clogged with oil" according to the EAI: they are holding 6% less oil then 12 months ago:

https://www.eia.gov/dnav/pet/hist/LeafH ... RRSUS1&f=M

As far as how much refined products are being held by the refineries has essentially been unchanged for the last 10 years. But more striking is the 24% DECREASE between 1995 and 2016. Apparent the trend for many years has been for our refineries to hold less and less inventory. A philosophy they hold with today. Again the FACTS from the EIA:

https://www.eia.gov/dnav/pet/hist/LeafH ... ersus1&f=a

I suspect they are confusing the total oil stocks in the US with the stocks held in the refineries. The refinery stocks only represent about 22% of the total oil in US storage. And remember much of that total oil is owned by speculators playing the futures market.

You don't really need to study the numbers. Common sense should tell you the refineries aren't going to buy oil they don't need: they only buy the amount of oil they need to supply anticipated demand. The refineries are not obligated to buy every bbl available. Also good to remember that almost no oil is purchased by the refineries directly from us producers. They buy from companies like Plains Resources, one of the largest buyers of oil from the producers. A petroleum sector company that has a revenue of around $2 BILLION per year that most here have never heard of.

But again a bit of common sense is called for: the whole sale crude buyers and blending companies only buy oil from the producers they expect to sell to the refineries in an acceptable period of time. If any one of these companies anticipates a problem selling they won't allow themselves to get "clogged with oil"...they simply reduce purchases from us producers. None of those potential buyers are obligated to buy all the oil available.

In reality the only portion of the dynamic that can get "clogged" due to an insufficient number of buyers is us PRODUCERS. Experiences vary buy not once has the Rockman worked for a company unable to sell a single bbl of oil they DECIDED to sell. Which is not the same as producers CHOOSING to not sell all they could produce.

So if they want to find out how much clogged oil there might be they need to poll us producers.
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby kublikhan » Mon 22 May 2017, 17:47:59

Observerbrb wrote:This is where we certainly disagree. I don't think the market will ever tighten up
Then I suggest you choose your sources more carefully as they are saying something different from what you think they are saying. Did you read the headline for your source?

Today's Stunted Oil Prices Could Cause Oil Price Shock In 2020

Observerbrb wrote:I think that the asset bubble courtesy of the CBs will eventually burst- This development will negatively affect the economy by causing a recession and maybe something worse, oil demand won't recover from this event but the opposite. Don't you think that real estate, virtual currencies, stocks and FANG are severely inflated? This is a complete madness. We have been down this road many times, that I presume that everyone here knows how it will end.

There are signs that some bubbles are starting to crack (one of them is the automobile sector in the USA), another one is Chinese demand. You can see some signs in some luxury property as well. Commercial and Industrian loans are stagnating - Do you know what happened last time they had this behaviour?
Yes, do you? Because what happened to oil demand does not match the narrative you are trying to paint here. Global oil demand dropped 1% between 2007 and 2009. Then the following year, it rose over 4% and continued to climb year after year. Even the greatest recession since the great depression only knocked oil demand down 1%. And even that was overwhelmed by demand growth 4 times over the following year.

Observerbrb wrote:We better deal with reality and take one step back, to take two steps forward later, or something sinister is going to happen - and soon.
I couldn't agree more. We need to stop acting like oil demand fell through the roof the last time we had a global recession and look at what happened in reality. In reality, demand fell for 1-2 years and then resumed it's upward trajectory hitting new records which continues to this day.
The oil barrel is half-full.
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby AdamB » Mon 22 May 2017, 18:57:38

Observerbrb wrote:If you pay attention, this is the picture which has been accurately described by Steve Ludlum and BW Hill.

Impressive.


Hogwash. Ludlum expressed some fanciful thought that the world would end on Jan-2015 because of lower prices stopping producers from producers...and instead producers produced more.

And the Hill gang says oil prices can only go down. More than a year ago I said right here on this website that the cure for low oil prices is yet more lower prices, the cure for low oil prices are the low prices themselves. Ludlum has already disqualified himself, Hill will in time, as soon as the obvious, expected, and 100% successful in the past anecdote I have relayed right here at po.com, free of charge, takes places.
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby peripato » Mon 22 May 2017, 23:45:51

AdamB wrote:
Observerbrb wrote:If you pay attention, this is the picture which has been accurately described by Steve Ludlum and BW Hill.

Impressive.


Hogwash. Ludlum expressed some fanciful thought that the world would end on Jan-2015 because of lower prices stopping producers from producers...and instead producers produced more.

And the Hill gang says oil prices can only go down. More than a year ago I said right here on this website that the cure for low oil prices is yet more lower prices, the cure for low oil prices are the low prices themselves. Ludlum has already disqualified himself, Hill will in time, as soon as the obvious, expected, and 100% successful in the past anecdote I have relayed right here at po.com, free of charge, takes places.

When did Ludlum say such a thing? I think you're just making shit up. His forecasting has been very accurate over the years, and I certainly made a LOT of money following it.
"Don’t panic, Wall St. is safe!"
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby Outcast_Searcher » Tue 23 May 2017, 15:51:10

peripato wrote:
AdamB wrote:
Observerbrb wrote:If you pay attention, this is the picture which has been accurately described by Steve Ludlum and BW Hill.

Impressive.


Hogwash. Ludlum expressed some fanciful thought that the world would end on Jan-2015 because of lower prices stopping producers from producers...and instead producers produced more.

And the Hill gang says oil prices can only go down. More than a year ago I said right here on this website that the cure for low oil prices is yet more lower prices, the cure for low oil prices are the low prices themselves. Ludlum has already disqualified himself, Hill will in time, as soon as the obvious, expected, and 100% successful in the past anecdote I have relayed right here at po.com, free of charge, takes places.

When did Ludlum say such a thing? I think you're just making shit up. His forecasting has been very accurate over the years, and I certainly made a LOT of money following it.

Steve Ludlam is a doomer type. Why would you be surprised that he has predicted economic collapse in the past? Are you in total denial of the idea that many wrong doomer predictions lessen credibility over time?
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby peripato » Tue 23 May 2017, 18:09:04

Outcast_Searcher wrote:
peripato wrote:
AdamB wrote:
Observerbrb wrote:If you pay attention, this is the picture which has been accurately described by Steve Ludlum and BW Hill.

Impressive.


Hogwash. Ludlum expressed some fanciful thought that the world would end on Jan-2015 because of lower prices stopping producers from producers...and instead producers produced more.

And the Hill gang says oil prices can only go down. More than a year ago I said right here on this website that the cure for low oil prices is yet more lower prices, the cure for low oil prices are the low prices themselves. Ludlum has already disqualified himself, Hill will in time, as soon as the obvious, expected, and 100% successful in the past anecdote I have relayed right here at po.com, free of charge, takes places.

When did Ludlum say such a thing? I think you're just making shit up. His forecasting has been very accurate over the years, and I certainly made a LOT of money following it.

Steve Ludlam is a doomer type. Why would you be surprised that he has predicted economic collapse in the past? Are you in total denial of the idea that many wrong doomer predictions lessen credibility over time?

But when did he actually predict a date? Not that it matters, since his general thesis of collapse is correct, and anyway I made a lot of money off his forecasts and the extra time that all the emergency central bank interventions have afforded us means I get to spend it before it becomes worthless. If anyone is in denial it's you lot who refuse to see the wood for the trees.
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby AdamB » Tue 23 May 2017, 21:59:36

peripato wrote:But when did he actually predict a date?


His Jan/2015 end of world call was made back around 2012 or so if I recall correctly. You don't see people referencing it as much now because...2 years after the world is supposed to end...and it doesn't...well...you end up with the same problem peak oilers and the boy who cried wolf have.

The thermo gang just predict ever cheaper prices...and instead of causing the same sort of economic boost they have under those circumstances in the past..well this time...its the end of the world.

peripato wrote:Not that it matters, since his general thesis of collapse is correct, and anyway I made a lot of money off his forecasts and the extra time that all the emergency central bank interventions have afforded us means I get to spend it before it becomes worthless. If anyone is in denial it's you lot who refuse to see the wood for the trees.


You made money off Ludlums forecasts? Which ones? The fanciful ones, or the contradictory? (His claim as to the value of his blog, not mine).
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby asg70 » Tue 23 May 2017, 22:13:20

peripato wrote:But when did he actually predict a date?


Oh, please. Most hide behind language which means the following:

Image
Hubbert's curve, meet S-curve: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby AdamB » Wed 24 May 2017, 14:22:26

asg70 wrote:
peripato wrote:But when did he actually predict a date?


Oh, please. Most hide behind language which means the following:

Image


Steve did better than that. He used this graph, rivaled in its ridiculousness only by the thermo gang.Image
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby donstewart » Wed 24 May 2017, 14:57:07

the end is nigh
See:
https://srsroccoreport.com/shale-oil-ga ... ash-flows/

Guest post by Heinrich Leopold (who I do not know)

Also, Steve says he will be posting new charts from Jean Laherrere regarding the Permian in a couple of weeks.

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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby Observerbrb » Wed 24 May 2017, 17:17:54

AdamB, Thanks for showing that he actually predicted a date...and was right! Much appreciated.
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby AdamB » Wed 24 May 2017, 18:19:16

donstewart wrote:the end is nigh
See:
https://srsroccoreport.com/shale-oil-ga ... ash-flows/

Guest post by Heinrich Leopold (who I do not know)

Also, Steve says he will be posting new charts from Jean Laherrere regarding the Permian in a couple of weeks.

Don Stewart


Will they be any more reasonable than this one, from his work with Campbell in the late 1990's that shows how individual wells produce? NOT.

Image
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby AdamB » Wed 24 May 2017, 18:21:38

Observerbrb wrote:AdamB, Thanks for showing that he actually predicted a date...and was right! Much appreciated.


And what might you think he was "right" about? On his blog, besides the end of the world nonsense, he said producers could no longer produce oil. You might not have looked at the recent US production increases...again....but those of us who have know the difference between producers making more, and producers making less. Interestingly, Steve also claimed that people wouldn't be able to buy the oil anyway, the country having ended by January of 2015, which begs the question...who are the producers even selling all that new oil to!

Steve is "right" like peak shaped curves describe oil production...... :lol:
Peak oil in 2020: And here is why: https://www.youtube.com/watch?v=2b3ttqYDwF0
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Re: Reuters: "World refiners are CLOGGED with oil"

Unread postby donstewart » Wed 24 May 2017, 18:32:02

@AdamB
If you prefer an explanation for what is wrong with oil and the world from a perspective very much like thermodynamics, you can see:

http://patzek-lifeitself.blogspot.com/2 ... -what.html

'As excess energy obtained from oil production decreases, so does the maximum achievable rate of blood flow, and the societal metabolism slows down.'

From Tad Patzek, former head of Petroleum Engineering dept at U of Texas, and now working in Saudi Arabia.

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