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How Much Oil Is in Storage Globally?

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SINGAPORE—The waterways surrounding this island nation have become home to one of the world’s biggest oil-storage sites. The problem: It is unclear how much oil is in the tankers anchored there.

The historic fall in oil prices has created a pileup of inventories, much of it stashed in tanks in the U.S. and other industrialized countries that are committed to disclosing the latest tally.

But millions of barrels are also flowing to locations outside the scope of industry trackers. Some countries, such as Russia and China, choose not to report their oil-storage levels. And traders and oil companies that park supertankers have no obligation to make public their supply.

Their decision to keep this information private doesn’t violate any international laws or agreements. But it makes for a more-cryptic and volatile oil market, analysts say. How much crude is in these locations, and how quickly it can be resold into the market, can affect oil prices.

“The data itself is so inconsistent,” said Harish Sundaresh, portfolio manager and commodities strategist for Loomis, Sayles & Co., which manages $240 billion. “In countries like Nigeria, Brazil, Angola, it’s not trustable.”
Keeping track of inventories has become more complicated as developing countries store and consume more oil.

Inventories are also taking on a bigger role as the Organization of the Petroleum Exporting Countries retreats from its traditional task of managing prices, analysts say. Since November 2014, OPEC has increased its production to pump at nearly full tilt. That leaves the group with less spare capacity, meaning inventories become more critical if supplies elsewhere are disrupted.

“OPEC has stopped being a swing supplier,” said Antoine Halff, director of the oil-market program at Columbia University’s Center on Global Energy Policy. “Given the uncertainty about whether shale-oil production in the U.S. can take the role of swing supplier, it falls on stocks” to replace lost barrels in the case of a supply disruption.

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With little hard data on certain storage spots, analysts piece together inventories using a patchwork of public information and guesswork. This process is playing out in Singapore, home to one of the world’s busiest ports and the Asian headquarters of many big oil-trading firms.

ENLARGE
At the beginning of July, 23 supertankers capable of holding 43 million barrels of oil were anchored for a month or more in the Singapore straits, according to Thomson Reuters’s vessel-tracking service, up from 15 ships at the start of the year. If they were full, it would be enough to meet the U.S.’s oil needs for more than two days.

But no official count of the oil exists. Thomson Reuters and others offer estimates based on the reported level of a vessel’s waterline. Yet a number of ships are likely carrying fuel oil, a refined product used in shipping, analysts said. Others may be carrying seawater, further complicating estimates.

“There are many different figures being mentioned in terms of the amount of ships which are actually being used for storage,” said Tom Bonehill, managing director of Norstar Shipping, a tanker owner. “And the amount of oil that’s on them.”

Uncertainty around storage was highlighted after attacks on Nigerian oil facilities in May and June. Following the assaults, some analysts forecast that Nigerian output would fall, which helped push oil prices above $50 a barrel. But shipping data showed Nigerian exports holding steady above 1.5 million barrels a day, according to data provider Windward.

Where did the exports come from? “That’s the big question,” said Omry Hochberg, Windward’s finance product manager. “Are they drawing from storage, or is production higher than people think it is?”

Nigeria eventually made its storage data public in July, but that was weeks after the attacks. The Nigerian National Petroleum Corp. didn’t respond to requests for comment.

Industrialized countries report inventory levels to the International Energy Agency, which publishes stockpile data with a two-month delay. Elsewhere, the data is patchier.

A body known as the Joint Organizations Data Initiative gathers global storage data, but it has no figures for Russia, China and others. Some developing countries lack the resources to gather such data and don’t view inventory disclosures as a high priority, experts say.

These locations are soaking up more oil. Countries outside the Organization for Economic Cooperation and Development, an intergovernmental organization of 35 countries with market economies, now account for half of global demand, up from 41% a decade ago.

“But that hasn’t been accompanied by equivalent gains in inventory reporting,” said David Fyfe, head of market research and analysis at trading firm Gunvor Group. “It adds another layer of opaqueness to the market.”

In addition, nations don’t report “floating storage,” or tankers anchored off their coasts, as in Singapore. The IEA said floating storage in June rose to 95 million barrels, the highest level since 2009.

In China, another storage mystery is unfolding. Government data show oil imports rising at a faster rate than refiners are processing it. The figures suggest the country built a surplus 160 million barrels during the first half of the year, enough to meet its oil needs for about two weeks.

Analysts believe those barrels have gone to commercial tanks, or to government-owned strategic reserves.

The distinction is critical. If most of the oil has gone to strategic reserves, demand could shrink once the tanks reach capacity, which some analysts say could happen this year.

“The reality is, you don’t have any definitive numbers that give you huge confidence one way or the other,” said Doug King, chief investment officer at RCMA Asset Management.

—Benoit Faucon contributed to this article.

Write to Dan Strumpf at daniel.strumpf@wsj.com and Nicole Friedman at nicole.friedman@wsj.com

WSJ



11 Comments on "How Much Oil Is in Storage Globally?"

  1. Rick Bronson on Sun, 24th Jul 2016 6:24 pm 

    To control the price, everyone were keeping their oil reserves secret, storage secret and every other thing secret.

    Oil is becoming an unreliable commodity.

  2. Plantagenet on Sun, 24th Jul 2016 6:33 pm 

    It makes sense to buy cheap oil in an oil glut and store it for use later when prices go back up.

    Cheers!

  3. Boat on Sun, 24th Jul 2016 7:19 pm 

    plant,

    Wish we would have been drilling thousands of wells while prices are low. sell that oil when prices reach $80. Why not drill some of those federal acres for the future and national security. Why not employ some of your citizens in a no lose proposition.

  4. makati1 on Sun, 24th Jul 2016 7:27 pm 

    How much is too much? That is the question that is going to break the bank soon.

    China is in a financial war with the Us at present. They, and Russia, are preparing for the hot one to follow. Are you?

  5. lp on Sun, 24th Jul 2016 8:15 pm 

    JODI has China May refinery intake at 11,568,000 – imports 7,613,000 + May production 3,984,000 = 11,615,000 = 47,000b/d not refined by 31 = 1.45 million build for May.

  6. lp on Sun, 24th Jul 2016 8:23 pm 

    (From July OPEC Report)The latest information for China showed a small drop of 0.4 mb in total commercial oil
    inventories in May to stand at 396.7 mb. At this level, Chinese commercial oil
    inventories were 14.8 mb lower than the same time the previous year. Within the
    components, crude stocks rose by 2.0 mb, while products fell by 2.3 mb.

  7. Plantagenet on Mon, 25th Jul 2016 1:34 am 

    @Boat

    Sadly, the morons in the Obama administration want to sell oil from the Strategic Petroleum Reserve at these low prices—not add more oil at low prices.

    Cheers!

  8. Kenz300 on Mon, 25th Jul 2016 7:13 am 

    WSJ owner by Murdoch of FAUX NOISE fame……….can you believe anything they write anymore………. Just like faux noise they spew OPINION as facts………… are they just promoting the fossil fuel agenda …….

    Koch Brothers Continue to Fund Climate Change Denial Machine, Spend $21M to Defend Exxon

    http://ecowatch.com/2016/06/22/koch-defends-exxon/

    Big Coal Funded This Prominent Climate Change Denier, Docs Reveal

    http://www.huffingtonpost.com/entry/roy-spencer-peabody-energy_us_57601e12e4b053d43306535e

  9. Kenz300 on Mon, 25th Jul 2016 7:31 am 

    Even Texas is going solar………….

    3 Sure Signs of Texas’ Emerging Solar Market

    http://www.renewableenergyworld.com/ugc-content/2016/07/22/3-sure-signs-of-texas-emerging-solar-market.html

    Solar Added More New Capacity Than Coal, Natural Gas and Nuclear Combined

    http://ecowatch.com/2016/06/09/solar-new-capacity/

  10. Sissyfuss on Mon, 25th Jul 2016 11:35 am 

    Plant, you’re an anchored tanker wanker!

  11. shortonoil on Mon, 25th Jul 2016 1:10 pm 

    ““The reality is, you don’t have any definitive numbers that give you huge confidence one way or the other,” said Doug King, chief investment officer at RCMA Asset Management. “

    The reality is, that including finished product, no one knows, and never has. The error margin for total (crude + finished product) inventories is probably 5 to 10%. With a market that can swing wildly on 1 to 2% changes in reported inventories it is not surprising that buyers are looking suspiciously at the futures quotes.

    As we have been saying for some time, past the 2012 energy half way point, the market will never again be able to absorb on its own all of the oil produced. The only way that this excess product can be used is through the creation of a sufficient enough quantity of debt to buy it. That debt creation process allows for the movement of energy from other sectors of the economy to the petroleum sector. It is a process that balances the energy equation that must always come into balance.

    Working from a historical perspective, where supply eventually always balanced with demand, buyers are looking for the market to eventually once again balance. What they will find is that an apparent balancing can only takes place when prices are moving down. This will only continue to place strain on an energy industry that can no longer supply enough energy to the economy to power the growth needed to maintain it. No growth, no increase in demand. No increase in demand, no balanced market.

    http://www.thehillsgroup.org/

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