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There has been rather a lot of puzzling going on about oil flows in several venues.
There is some considerable indication that US oil imports are down, and domestic production is not rising even in a transient way.
And, of course, US oil consumption is sending off varying signals. Ethanol is a very marginal determinant of consumption in comparison to GDP growth. Further, the suspension of flow through the Enbridge pipeline during the summer should have spiked shipping imports and did not.
China consumption is growing, but the US remains the big kahuna of oil burning. Odds are, my read, is consumption is down, and not because of any multicolored unicorns trotting around with higher mileage cars. Rather, simply, the unemployed don't drive much.
oil $125bbl next winter... quote me. that is my minimum...
I will gladly sell you that call option.
Gosh, are you saying that oil supplies and prices are a victim of inflation and a devalued currency rather than a demand driven price rise?
No. Oil is the only currency that matters.
It's is the alpha asset. All else in this society derives from it.
It has two significant attributes:
1) It is the only currency that once it is aquired it is burned.
2) It cannot be printed.
@sushi
I really like your line of thinking, but you need to modify it to include storage. Electricity* cannot be stored, but oil and refined products can. This storage prevents can absorb rising demand to prevent price shocks or it can increase prices during periods of inventory builds.
* I know small scale producers can store electricity in batteries, but that is not practical for the industrial demand factor.
BDI falling, falling, falling.........................oops
Tanker stocks totally crashed Friday.
Could be a capitulation low, who knows?
well, either cap low or catch a falling knife, esp that dog GMR. Fundamentals i.e. financials [like that matters - ha!] favor VLCCF - healthiest of the bunch and FRO. For snap-back, I think it's FRO. Never though I'd say it, but thanks, Robo - forgot all about this sector
Robo! how are you feeling? hows the weather where you are?
I hope that all is well with you and yours now and always, JW
Those are some ugly muthaf#ckin' charts, alright!
Unlikely Robo - spot rates have utterly collapsed over the last few weeks - until some of these owners close shop the entire industry will continue to suffer.
I'd rather be a trader at Vitol than own a tanker company.
Funny, the BDi has kind of stabilized in the week or two since it's daily decline recently.
I think it'll be a "Ring a ring of Roses" scenario. All go down together.
I like the fact that the DOW is 3/4ths of DOWn.
Oil consumption here in India roars along. The terrible traffic, which in my cynical view has been engineered to be thus, leads to even excellent mileage tiny-cars consuming hugely, all the underserviced trucks and buses et. al. being even worse. And with prices having risen recently, one thought slow-down in consumption, but from a visual, gut check, we burn away.
ORI
http://aadivaahan.wordpress.com/2011/01/21/accidental-lives/
-4% capacity....ouch.
this is so sad to see.
http://www.writessay.com
Yes it is...and their web page was FULL of "typos".
Quite possibly the stupidest person I know...has a masters. I have NO idea how he got it...no idea at all. He must have bought it.
We are SO fucking LAZY...we deserve whatever happens.
Hmmm ... I noticed this on Yachtworld the other day:
http://www.yachtworld.com/boats/2011/Tanker--2275334/Brazil
The $1.4b price tag doesn't seem to be an obstacle.
Also: floating storage is pretty much gone so swing producer is back to Saudi Arabia which can charge a higher 'volatility premium' since KSA is the only producer with meaningful spare capacity (2mbpd?)
High prices have wrung out the floaters, now what?
High prices are also bankrupting the EU and US states. I'd watch yields in junk and corporates as a barometer as peeps sell bonds to long fuel.
Helluva an analysis, micro-detailed on every fucking aspect of tankers except for the glaringly obvious... Net oil exports are down, ergo, there is overcapacity that will only increase. A while back I looked at the tanker cos., some had great balance sheets, very well run, but the trend is against them...stay away....
I cannot sum it up any better than the following chart
http://www.theoildrum.com/node/7241#comment-759810
Thank you for the shockingly clear insight....
(you guys should really check out flak's link)
Say it aint so---rates will be dropping as tonnage demand exceeds demand growth. As of march which was the beginning of the end saw about 170 (just) vlccf's were to be sent to the breakers--91 newbuilds on order-this has happened as this information is from March 2006. If anyone wants to play shipping one should look into yellowcake carriers or livestock carriers.
Good hunting
i wouldn't touch shipping, oversupply via sth korea/japan stimulus ship building programs.
as far as the BDI and clean/dirty ship rates. oil has been on a 25mth cyclical bull run...it may have peaked. specs who have been buying on the brent and WTI could unwind hard. keeping in mind that china may have overcapacity with oil (storage), also china may be on course for it's inflation crash.
very interesting report considering jan 2011 clean rates were up.