Crude Inventories Surge To Record High As Energy Demand Collapses

Tyler Durden's picture

A month ago we highlighted the somewhat stunning reality of the real economy via the EIA's detailed energy supply and demand data. The key takeaway was  that we hoped this did not represent the true state of the economy since the data was so dismal. Fast forward to today and the DOE just released a much higher than expected build in crude inventories that took the stuffed-channel of oil products to all-time highs. The 395.3 million barrels is higher than the previous record in July 1990. There appears to be a number of factors at play - none of which are positive. There is a surge in supply due to the incessant harvesting of shale oil (which could have its own problems as we noted here). Second, we suspect there is a degree of 'channel-stuffing' occurring - if we pump it, they will buy - as producers and transporters are desperate to keep active and show incremental business (despite fading railcar loadings). But perhaps most important, as EIA data has shown, there has been a collapse in end demand for crude products not seen since the 1990s. Today's surge in inventories appears to confirm demand remains subdued at best.

 

 

Chart: Bloomberg

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Cdad's picture

I also have been able to feel the ongoing recession in terms of traffic on the roads...or the lack thereof.

WarPony's picture

they all came to Houston ... bad enough with the texters and cell phone junkies, esp the illegals with a bumper sticker that says "My last Car was a _______ (burro, rickshaw, camel, etc...).

caimen garou's picture

there is your fucking recovery dictator o, oh yes we can!

derek_vineyard's picture

 

 "I’m asking you to believe. Not just in my ability to bring about real change in Washington . I'm asking you to believe in yours."

Enceladus's picture

Back to levels not seen 6 months before we invaded Kuwait

Edward Fiatski's picture

Could also be in preparation of the next major war.

Rainman's picture

Average U.S. gas prices 1990-1999 = $ 1.10

Average U.S. gas prices 2000-2009 = $ 1.65 to $ 4.00

http://www.buzzle.com/articles/gas-prices-history.html

Just a coincidence ? Commodity Futures Modernization Act 2000 signed by Bubba Clinton on his way out the White House door.

marathonman's picture

Saudis getting pissed about getting payed in increasingly worth-less dollars demand more dollars for their real goods.  I'm not sure there should be a great mystery about this.

CheapBastard's picture

Brake moar windows...

alex_g's picture

"

Crude Inventories Surge To Record High As Energy Demand Collapses"

 

The "surge" is entirely explained by increased imports, not reduced demand.  Read the full report 

 

http://ir.eia.gov/wpsr/overview.pdf

 

 

haskelslocal's picture

Did you read the report?

It says Net Inports Down -12.7%.

It says Domestic Production Alaska Down -6.8%

Lower 48 production up 24.3% which must be coming from ND and fracking. 

 

CrashisOptimistic's picture

All oil is not created equal.

"Oil" coming from shale is mostly a blend of natural gas liquids with a bit of crude included.  It's a very tough problem in terms of definition.  Even oil itself has different API ratings defining weight per unit volume.

The parameter that matters is joules.  North Dakota "oil" is not as energy dense as that from most conventional fields.

Be all this as it may be, it is not decisive for the collapse in demand.  That's all failed economy. 

haskelslocal's picture

I appreciate the insight. It figures a govt report wouldn't weigh apples to apples.

It'd be nice to see stats that converted weighted quantities to joules and then we could extrapolate value.

DaveyJones's picture

there's human "inventories," then there's geologic. Anyone who has studied peak oil predicted these cycles of economic collapse affecting price but always, in the big picture climbing. And Crash is right, this is about stored energy not a stretched definition of the word "oil" 

TrumpXVI's picture

Hey CrashisOptimistic,

I want to know more about the joules.

I think there is something going on there.  Back in '09, after I had started hypermiling with my '06 Prius, I was able to squeeze over 60mpg out of that puppy during the warm summer months.  I haven't been able to repeat that performance since and in fact, mpg seems to be slowly getting worse.  I have no reason to suspect the car.  It gets its factory recommended service religiously every 5,000 miles and runs great.  But so far this spring, it has become a real challenge to get 50mpg.  

I think somethings up with the quality of the gasoline.

BTW, I have documented every tank of gas now since '07 or'08.

I'm in PA and I think all our gasoline is refined from Brent, or maybe not?

DaveyJones's picture

does it have ethanol? Even if they don;t admit it, you're probably right.

TrumpXVI's picture

There IS an ethanol component.

CrashisOptimistic's picture

10% of your tank is ethanol.

ethanol has nowhere near the joules per gallon that gasoline does.

See if your numbers are consistent with that, and keep in mind ethanol may be causing cumulative other engine degradation.

WTF_247's picture

Engine degradation is what is wanted.  You have to replace the car now.  They would go bankrupt if the car lasts too long so they backdoor it to ruin the engine from the inside slowly.  GM inventories are waiting .....

DosZap's picture

Engine degradation is what is wanted. You have to replace the car now. They would go bankrupt if the car lasts too long so they backdoor it to ruin the engine from the inside slowly. GM inventories are waiting .....

 

Exactly what E15 would, was doing to many newer cars.And it was/is not covered under warranty.Use E15 at your own peril, big repair bills coming your way.

alex_g's picture

Of course I read the report.  Net imports are down 12.7% year over year.  The "surge" being talked about is week over week.  Look at the bottom of the first page.  Week over week, net imports are up 908K barrels a day.  Multiply that by 7 and tell me what you get.

haskelslocal's picture

The chart above in the main article does not speak to week over week (Dates back to 1990) so we must be looking at it differently. I see a "surge" over the last few years. 

Looking at line 4, Net Imorts Crude Oil I find a 602 increase. Adding line 21 Other Supply of 306 gets a total of 908. Not sure why you're including Ohter supply when talking about oil nor why you are asking me to multiply by 7.

Thanks for the report though! Really appreciate it.  

alex_g's picture

The article is in response to today's inventory build report and blame crashing demand as the culprit.  I was merely pointing out that this is not the case.  I'm asking you to multiply the increase of daily net imports and multiply by 7, which gives us the weekly increase, which you then can compare to the weekly build.  This shows that the entire weekly build in oil inventory can be explained by the increase in imports, not "crashing demand".

 

Yes, there is long term demand destruction coupled with increased domestic production that has cut net imports.  Per capita oil use is back to early 1960's levels, which has been caused by more fuel efficient cars, far less heating oil use, the disappearance of fuel oil used to generate electricity and NG and NGL's being substituted for oil in chemical production.

 

Here is a very useful page if you have an interest in this sort of data.

 

http://www.eia.gov/petroleum/data.cfm

 

 

forwardho's picture

Sir, that link has .gov in it.

All credibility is lost with .gov

CrashisOptimistic's picture

Heads up.

Some imported oil is refined in the US and the refined product (gasoline or whatever) is shipped back to where the oil came from.  For example Venezuela has little refining capacity for their difficult oil.

The US Gulf coast can handle this, does so, and ships back to Ven.

This means some import number isn't US consumption, but it also means some "refined product export" is not from US crude.

WTF_247's picture

A lot of the refiners have figured out there is more profit to be had by importing oil, refining it and then re-exporting.  This is better for them but worse for US citizens through higher prices.  The govt does not really care or they would put a stop to that game.

alex_g's picture

That's why I always look at the net imported oil and products number...

DosZap's picture

http://ir.eia.gov/wpsr/overview.pdf

 

You lost me at this link.

Believe nothing you hear, and half of what you see.

resurger's picture

Must liberate Iran

FeralSerf's picture

Must stop Iran from selling oil too cheap. They're ruining the market.

fonzannoon's picture

so energy prices drop. Bullish right?

WTF_247's picture

No no no.

 

Drop is bullish.

Gain is bullish.

Flat is bullish.

 

Now that you have the code right get in there and buy buy buy.

The Dancer's picture

But when will real journalists stop the false narrative of "green" anything...the real shoots need to be shot...or did I spell that wrong?

Edward Fiatski's picture

Confirmed in this - http://www.dryships.com/pages/report.asp

Ten-phucking-Grand to hire a Capesize tanker/cargoship? There's no global demand for anything.*

GET FUCKED!

*World War III comes next to alleviate the problem. Just like last time, and the time before that, and the time before even that.

buzzsaw99's picture

I own part interest in a hole in the ground. Yes, it is just a hole, a very deep hole, and if you yell down into it someone in China can hear you. It hasn't produced anything worthwhile in twenty years, much like the bernank.

Hedgetard55's picture

This can't be! Peak Oil and all that.

 

the big question is how gas can be at $3.50 a gallon with demand plunging? Can you say QE and oil futures contracts, kids?

firstdivision's picture

Never would that be true.  We all know that QE helps people get jobs that pays them well enough that $3.50 is like a penny 5 years ago.

CrashisOptimistic's picture

Yeah, I can, but you must learn to say "joules per barrel".  All oil is not created equal.  NoDak oil is energy light. 

There is enormous bullshit being foisted by propaganda.

espirit's picture

Shhhh... Don't let the cat out of the bag.  The sheeple can't handle the truth.

DaveyJones's picture

our country has never lied about anything to do with oil, the reserves in the ground, or anything remotely connected to countries with the greatest reserves.

WTF_247's picture

In case you haven't figured it out yet - correlations are switched on the fly to match the uptrend.  When one correlation breaks they move onto another.  The desired outcome is higher prices.  So they switch to whatever will help them achieve the goal.  This month it might be AUDUSD, next month its bonds, next month after its oil etc.  It does not matter what it is - anything will work as long as there is some justification to the algos to keep buying.

ebworthen's picture

It's all those people not driving to jobs they don't have.

Krugman and his ilk will claim it is electric and high MPG gas vehicles.

CrashisOptimistic's picture

Bingo.  Those 500 electric GM Volts really put a dent in the consumption of 250 MILLION cars.

If you have no job, you don't burn oil.  If an airline cuts back flights, it burns less.  Oh, and the new mileage standards?  They don't get applied for another 5 or so years.

 

youngman's picture

Must be all of the Volts and Tesla´s selling...

ebworthen's picture

Don't forget Fisker's!

Oh wait...

de3de8's picture

To the people that don't need the help via the 7.5k credit that the rest of us slobs are paying for. Moar Fair.