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Meanwhile, This Is Who Is Quietly Buying All The Cheap Oil

Tyler Durden's picture




 

With the US Shale Oil industry up in arms, Venezuela screaming, and Russia awkwardly quiet (as the Ruble slides with the falling oil price stabilizing domestic inflows), the 'secret' Saudi-US oil deal that pressured prices for crude down to $80 (18-month lows today) has 'hurt' a lot of the world's producer nations. However, as Bloomberg reports, there is one nation that is very grateful. The number of supertankers sailing toward China’s ports surged to a nine-month high as over 80 very large crude carriers (VLCCs) - the industry’s biggest ships - sail toward the Asian country’s ports. At an average of 2 million barrels each, the 160 million barrels will help refill China's 727 million barrel SPR which it started in 2012.

 

There are 89 tankers sailing for Chinese ports, 80 of which are VLCCs - the highest since January 3rd.

 

As Bloomberg reports,

The number of supertankers sailing toward China’s ports surged to a nine-month high amid speculation an oil-price slump is encouraging the world’s second-biggest crude importer to accelerate purchases.

 

There are 80 very large crude carriers, the industry’s biggest ships, sailing toward the Asian country’s ports, according to IHS Fairplay vessel-tracking signals compiled by Bloomberg at about 10 a.m. today. That’s the highest since Jan. 3. Average shipments are 2 million barrels.

 

Brent crude, the global benchmark, plunged to a four-year low yesterday amid speculation Saudi Arabia, Kuwait and other nations in the Organization of Petroleum Exporting Countries won’t curb production. The slump is likely encouraging buying to fill China’s strategic stocks, according to Energy Aspects Ltd., a London-based consultant.

 

“There’s a lot of bargain hunting going on,” Richard Mallinson, an analyst at Energy Aspects, said by phone. “Whilst prices are low we think there’ll be buying for Strategic Petroleum Reserve filling and also just trying to capture these discounted crudes.”

 

...

 

The 80 bound for China compare with an average of 63 for the past two years and match a record in data that started in October 2011.

*  *  *

In summary, just like Chinese gold imports rise when the price of gold drops; so China does the logical thing with other commodities, (i.e. oil) when prices tumble and instead of selling into the paper rout, it buys all the physical it can get its hands on.

 

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Wed, 10/22/2014 - 21:34 | 5365929 ZerOhead
ZerOhead's picture

Fill Baby Fill...

Wed, 10/22/2014 - 21:40 | 5365945 Bloppy
Bloppy's picture

And yet prices are barely holding $80 as we speak

 

Elsewhere: Rosie O'Donnell (!) defends Monica, blasts Bill

http://tinyurl.com/khjfcgn

Wed, 10/22/2014 - 21:43 | 5365954 knukles
knukles's picture

Fuck Rosie O'Donnell  (figuratively)
She and Bill Mahr are two of the most Offensive People....

Wed, 10/22/2014 - 21:59 | 5366003 jeff montanye
jeff montanye's picture

off topic from rosie and bill but i was intrigued that the chinese spr is exactly as big as that of the u.s.:

Strategic Petroleum Reserve | Department of Energy - U.S. ...

energy.gov/fe/services/petroleum.../strategic-petroleum-reserve‎

The Strategic Petroleum Reserve (SPR) is the world's largest supply of emergency crude ... The SPR's formidable size (capacity of 727 million barrels) makes it a ...

Wed, 10/22/2014 - 22:51 | 5366058 ZerOhead
ZerOhead's picture

Makes sense to keep it "topped off" in uncertain times

You just never know... some day you may turn on the MSM news to find your nation accused of torturing lesbians or something... next thing you know America has declared war on you....

Thu, 10/23/2014 - 04:38 | 5366569 Bangalore Equit...
Bangalore Equity Trader's picture

Listen.

Don't you mean black colored Jewish lesbians with "FREEDOM" tattoos?

Wed, 10/22/2014 - 22:02 | 5366012 SafelyGraze
SafelyGraze's picture

with metal, oil, and unemployment plummeting to astonishing new lows, it's time we all join together in the upcoming election and vote for tptb.

security.

prosperity.

together.

brought to you by the friends of tptb

hello, I'm tptb and I approve this message.

Wed, 10/22/2014 - 22:24 | 5366083 ZerOhead
ZerOhead's picture

Free Stuff?

Where's the free stuff?

Thu, 10/23/2014 - 05:53 | 5366601 Urban Redneck
Urban Redneck's picture

It's everywhere.

If the money is free, how does the "stuff" you later receive in trade for that money cost anything?

The only thing more dangerous than a bankster in pursuit of profit, is a bankster who doesn't even care about the profit.

The only question is whether the oil buyers are also persons of (strategic) interest (corporate or governmental) to The Party.

Currency pegs are funny things. None of this would be possible without the Fed's wanton increase of the money supply.

As it stands, you (and a lot of others) are paying for their crude oil shopping spree.

And the only way for the USSA or the banksters to beat "them" is to endure the pain and pay the piper, instead of kicking the can.

When Neocon geopolitics and Austrian economics intersect, you have entered the Twilight Zone.

Thu, 10/23/2014 - 02:15 | 5366480 Volkodav
Volkodav's picture

I'd rather not hear about them..

and was off topic besides..

Wed, 10/22/2014 - 21:41 | 5365955 Bumbu Sauce
Bumbu Sauce's picture

War on wominses!

Wed, 10/22/2014 - 22:16 | 5366018 ebworthen
ebworthen's picture

And yet Rosie will vote for Hillary.

Her ilk don't know their mouth from their bunghole.

Bill Clinton is a duplicitous Macbeth, but Hillary is his Lady Macbeth.

Thu, 10/23/2014 - 02:39 | 5366500 CHX
CHX's picture

In the NWO oil IS black gold... ?

Wed, 10/22/2014 - 21:40 | 5365947 knukles
knukles's picture

Law of Unintended Consequences is a Bitch.
Push gold prices lower
China buys in Bulk
Push Oil prices lower
China buys in Bulk

Say thank you, Obie
Frank roo Hobie!

Wed, 10/22/2014 - 22:56 | 5366160 seek
seek's picture

Not only buys in bulk, but gets the goods at a discount and gets rid of those pesky USDs that will devalue some day at the same time. This is nothing but win.

Wed, 10/22/2014 - 23:42 | 5366280 willwork4food
willwork4food's picture

Obviously stagged. Why are not WE buying for the SR's? We will see hyper-DEFLATION soon when millions lose their IRA accounts to scammers that go BKR because the purpose of ending QE was just that. Kudos to the PTB for thinking of this evil plan that will off millions of useless eaters.

Doesn't this time resonate with 2008?

Wed, 10/22/2014 - 21:36 | 5365937 Hopium Dealer
Hopium Dealer's picture

China: short human rights, long common sense

Wed, 10/22/2014 - 21:39 | 5365942 Shizzmoney
Shizzmoney's picture

This should be their country slogan.

 

Wed, 10/22/2014 - 22:01 | 5366007 Handful of Dust
Handful of Dust's picture

It's funny; I read somewhere how the song, "Internationale" used to be one of the PRC's keynote themes:

 

http://en.wikipedia.org/wiki/The_Internationale

 

 

Wed, 10/22/2014 - 21:51 | 5365987 HomersGhost
HomersGhost's picture

How is having a population of a billion low IQ dog eating ricebots even close to having common sense?

Wed, 10/22/2014 - 22:00 | 5366005 Apeman
Apeman's picture

The spirit of Murica is among us.

Wed, 10/22/2014 - 23:26 | 5366240 F-Tipp
F-Tipp's picture

Have you taken a look at our country lately? The Chinese are buying up real assets (edit: and energy) hand over fist. We're buying up apps.

Thu, 10/23/2014 - 01:50 | 5366466 angel_of_joy
angel_of_joy's picture

Right now the Chinese act & talk way more inteligently than the Americans. Just saying...

Thu, 10/23/2014 - 02:13 | 5366477 Volkodav
Volkodav's picture

Wait until your low IQ exceptionals get hungry...

better worry about your own country.

 

btw I not fan of chine

Wed, 10/22/2014 - 21:36 | 5365939 booboo
booboo's picture

Krugman would disagree with this policy.

Wed, 10/22/2014 - 21:41 | 5365949 kchrisc
kchrisc's picture

Dear China,

Now that you have it all, can we borrow some?

Thanks,

The Rothschild banksters.

 

An American, not US subject.

Wed, 10/22/2014 - 21:43 | 5365957 limacon
limacon's picture

Oil is a declining commodity . 

Cheaper energy alternatives have been found .

The low oil price is due to lack of speculator's interest .

 

Similar argument to 

http://andreswhy.blogspot.com/2012/06/fracking-and-oil-price.html

 

Only more so .

http://andreswhy.blogspot.com/2014/09/rogue-swan-tech.html

Wed, 10/22/2014 - 21:48 | 5365976 Spitzer
Spitzer's picture

The only thing that can undercut oil in the future is nuclear.

Wed, 10/22/2014 - 21:54 | 5365992 Maxter
Maxter's picture

Nucleau Fusion I might add.

Wed, 10/22/2014 - 22:07 | 5366029 ForTheWorld
ForTheWorld's picture

Nuclear Fusion - the King of all Vaporware. "Just another few years... really! We got it this time!"

 

Wed, 10/22/2014 - 23:23 | 5366236 FeralSerf
FeralSerf's picture

There has been some enabling technology in very fast high energy switching in the last few years.

Updated Prospects for Commercial Nuclear Fusion

http://nextbigfuture.com/2014/10/updated-prospects-for-commercial.html

Thu, 10/23/2014 - 09:21 | 5367004 sleigher
Wed, 10/22/2014 - 21:43 | 5365958 ekm1
ekm1's picture

Saudis have reduced, not expanded output.

They are simply selling it at lower price, so it forces banks to dump oil from storage held there as collateral uber rehypotheticated for derivatives.

 

So, extra output is coming from storage oil dumped from banks and hedge funds, not from saudis

 

Isis is selling it at $25-40 per barrel, hence market will converge to that price

 

China wants to dump as much USD as possible and keep commodities as reserves, not USD.

At about 6 million barrels per day consumption, 160 million barrels is just 25 days of consumption

Wed, 10/22/2014 - 21:51 | 5365983 Spitzer
Spitzer's picture

Maybe these tankers are going there for commodity collateral financing deals.

Wed, 10/22/2014 - 22:06 | 5366026 ekm1
ekm1's picture

Same as with anything else like iron ore, copper etc

Wed, 10/22/2014 - 21:58 | 5366001 HomersGhost
HomersGhost's picture

"So, extra output is coming from storage oil dumped from banks and hedge funds, not from saudis
"

Bollucks.
Saudi crude production isn't being bought because it is overpriced and crap.

http://oilprice.com/Energy/Oil-Prices/How-And-When-Will-Saudi-Arabia-Res...

China is just filling their SOR with cheap, non saudi oil.

Wed, 10/22/2014 - 22:09 | 5366025 ekm1
ekm1's picture

It is quite cute providing an internet link as proof of something

 

So, I will be cuter

http://www.menafn.com/1093987272/Saudi-oil-exports-at-3year-low#.VEd1jBf...

 

There is a reason I very rarely provide links. Because most is propaganda

Wed, 10/22/2014 - 22:10 | 5366042 HomersGhost
Wed, 10/22/2014 - 22:14 | 5366055 ekm1
ekm1's picture

Bloomberg has been caught several times doing propaganda.

One I can recall was the bombastic lie that Germany had accepted its gold to stay at NY Fed

Wed, 10/22/2014 - 22:18 | 5366067 HomersGhost
HomersGhost's picture

"Bloomberg has been caught several times doing propaganda."

That is a logical fallacy.

China has been making a move in Columbia for quite some time.

http://www.thedeal.com/content/energy/sinochem-buys-total-colombian-oil-...

Wed, 10/22/2014 - 22:21 | 5366071 ekm1
ekm1's picture

We live in a world of fallacy

Wed, 10/22/2014 - 22:20 | 5366075 QQQBall
QQQBall's picture

ISIL sets the price? Douche

Wed, 10/22/2014 - 22:32 | 5366080 ekm1
ekm1's picture

I am stupid

Thu, 10/23/2014 - 09:53 | 5367129 meghaljani
meghaljani's picture

Yes. You are. 

Wed, 10/22/2014 - 21:49 | 5365982 dirtyfiles
dirtyfiles's picture

finally one smart player...

 

Thu, 10/23/2014 - 01:30 | 5366450 disabledvet
disabledvet's picture

Takes a mountain of energy to make a mountain of energy.

China is just a consumer and therefore not a net beneficiary of lower oil prices as it does not create final demand through economic growth.

The USA is by far the biggest beneficiary of a global collapse in both oil and natural gas prices as these prices feed directly into industrial use and capacity...first andforemost driving more energy production thus sustaining the lower price.

One would be a fool not to be in sourcing of pretty much everything into the USA right now as it is the low cost leader.  Even with the dollar surging.

Lest we forget there is a war going on...quite poorly I might add.  But the production lines remain open. You can build some pretty bad ass shit with energy prices this low and materials prices having collapsed.

Just caddies in China look good here.

Trying to export food out of the USA just got a lot more expensive too.  Good luck finding stable sources of supply with Russia and Ukraine going toe to toe now.

I still think we're gonna get a solid 20% correction minimum in equities now that we know Canada is as incompetent as the USA is.  These are DOMESTIC terrorists folks.

Sell,sell,sell...

Wed, 10/22/2014 - 22:04 | 5366015 Bangin7GramRocks
Bangin7GramRocks's picture

Leave it to ISIS to sell oil for what it's worth. Free from the banker price manipulation. Where can I get me some a that turrist oil?

Wed, 10/22/2014 - 22:11 | 5366047 wrs1
wrs1's picture

Sure if you steal what isn't yours, you can sell it for way less than it is worth because it cost you nothing.

Wed, 10/22/2014 - 22:32 | 5366108 Bangin7GramRocks
Bangin7GramRocks's picture

How is it stealing exactly? They conquered the lands that hold the oil. How is the completely fake bullshit "royal family" in Saudi Arabia any different?

Thu, 10/23/2014 - 01:49 | 5366465 bid the soldier...
bid the soldiers shoot's picture

 

Look at all the tea the Brits nicked from China.  

Oh, wait a minute. They paid for it with opium that they nicked from india.

My bad.

Thu, 10/23/2014 - 08:05 | 5366727 overmedicatedun...
overmedicatedundersexed's picture

we give you cheap oil and you don't sell our debt..or we give you land, manufacturing, PM's and africa, oil,coal & you get control of the eastern pacific,but you must buy& keep our debt ..(opium we got if you need that too)

Wed, 10/22/2014 - 22:14 | 5366017 besnook
besnook's picture

interesting correlations appearing. the price of gold(and silver) drops down to western extraction costs in the face of record bullion demand from asia. don't forget china is probably the world's biggest gold miners(the debeers of gold?) and oil drops to zero margin on record asia demand. put this in perspective, china growing, at even, 5% is multiples better than the usa economy contracting as a result, for the chinese.

what does this mean besides removing the 1941 japanese conundrum as a military strategic play? the chinese play go, by the way. the fn chinese rule the world!lol! as niall furgeson(sp) remarked, "it is no fun growng up in a collapsing empire." or there abouts.

the talk about the saudis controlling the price of oil is on its head. the chinese control the price of oil now, and gold, just as the customer always has.

Wed, 10/22/2014 - 22:11 | 5366039 wrs1
wrs1's picture

One thing for sure, the drop in price is due to dumping oil that has already been produced, not oil that will be produced and once that oil is all gone, the oil that is being produced will be back over $100 quickly.  They never threaten SPR dumping if there is a surplus and yet they are threatening SPR dumping.  

Wed, 10/22/2014 - 22:36 | 5366119 besnook
besnook's picture

consider this play. normally oil is fungible. what if china uses existing contracts for oil from russia and iran to disrupt the open market price enough to maintain a lower price for its "on the books" supply? especially now that oil is readily bought with exdollars and gold?

i don't think they care that it pressures wti because an improved usa consumer market exoil is good for china.

yes/no?

Wed, 10/22/2014 - 22:31 | 5366104 luckylogger
luckylogger's picture

What a concept........

Buy low????????????

Have patience and buy when the price drops to your price.....

Maybe we can all learn from the china dudes.................

I doubt I will.........

Wed, 10/22/2014 - 22:56 | 5366157 theyjustcantstop
theyjustcantstop's picture

i can't remember which s. am. co. soros was in with that durning the drilling ban, i.e. bp spill america loaned several billion to help them drill, because it will be good for america, and even better for soros.

was it columbia, or brazil, the countries selling to china now?

 

Wed, 10/22/2014 - 23:15 | 5366217 Atomizer
Atomizer's picture

Lacking oil contracts and the distrust of City of London / Washington DC. 

Same jackasses telling us $100 / barrel is the magic number to falsify earning gains. 

The game is about up for the installed DNC Traitors hoping to sit on the global table. 

Today's gamble in Canada was to arrange the North American Union Pack. We don't have any terrorist threats, just Washington, DC think tanks dreaming up a new crisis. 

Council of Foreign Relations. Extremely bad people hired onto the staff. They ask for American financial aid and wear a kosher dish on their heads. 

Sick fucks galore. 

 

 

Wed, 10/22/2014 - 23:21 | 5366227 Dragon HAwk
Dragon HAwk's picture

I used to play the Submarine war game Silent Service.. those Tankers are big fat Torpedo Targets.

  I have no idea why that popped into my Head...   :)

Thu, 10/23/2014 - 01:43 | 5366460 bid the soldier...
bid the soldiers shoot's picture

 

Imagine the ocean with 160 million barrels of oil floating on its surface.

Priceless.

Wed, 10/22/2014 - 23:40 | 5366271 Spungo
Spungo's picture

160 million barrels of oil. It's actually difficult to imagine how much that is.

Why are we always trying to help China? We give them cheap gold, we give them cheap silver, we sent most of our investment capital and jobs to them, and now we give them cheap oil.

Wed, 10/22/2014 - 23:40 | 5366274 Joe A
Joe A's picture

Perhaps Saudi Arabia has another secret oil deal. With China.

Thu, 10/23/2014 - 01:15 | 5366435 news printer
news printer's picture

 China SPR fill could help rebalance market, support oil prices: analyst Singapore (Platts)

CLOSE TO 90% OF CURRENT SPR CAPACITY FILLED

The bank estimates that China's SPR level had reached 204 million barrels by August, equivalent to 30 days of imports. This was about 40 million barrels higher compared with the end of 2013.

Phase 1 of China's SPR, totaling 103 million barrels, is widely believed to have been filled by 2009 when oil prices were well under $100/barrel.

This means China will have additional 129 million barrels of phase 2 capacity coming online by the end of 2016, according to the report.

"China will need 571 million barrels of storage by 2015 and 714 million barrels of oil in storage by 2020 to cover 90 days of import, which requires aggressive infrastructure build-out post 2016," Bernstein said.

http://www.platts.com/latest-news/oil/singapore/china-spr-fill-could-help-rebalance-market-support-26911399

Thu, 10/23/2014 - 02:30 | 5366481 bid the soldier...
bid the soldiers shoot's picture

 

The number of supertankers sailing toward China’s ports surged to a nine-month high as over 80 very large crude carriers (VLCCs) - the industry’s biggest ships - sail toward the Asian country’s ports.

If over 170 million barrels of oil, bought and paid for, are in tankers heading to China's SPR, it begs the question: if that oil was unsold, still on the shelf, adding to today's supply of oil on the market, how much lower would the price of oil be today?

I, for one, do not buy the theory that the falling oil price is the result of the 'secret' Saudi-US oil deal to pressure the rouble down.  If there was a 'secret' Saudi-US deal, it was foremost to rescue Europe from a triple (and maybe terminal)-dip recession and America from what ever lying-lie Washington is currently calling its mess.

The secret deal is wishful thinking.  

A jingoistic hope that the US was clever enough to score a coup resulting in the weakening of the rouble.

The fact is that the price of oil is falling not only because of an oversupply of crude, BUT BECAUSE OF A GLOBAL EVAPORATION OF DEMAND.

 

 

Thu, 10/23/2014 - 07:56 | 5366707 A82EBA
A82EBA's picture

cant upvote you so..plus 1

Thu, 10/23/2014 - 02:24 | 5366492 q99x2
q99x2's picture

Looks like competition among the oil families. That's not good.

Thu, 10/23/2014 - 02:26 | 5366494 devo
devo's picture

China buys everything good. We buy shit.

Thu, 10/23/2014 - 03:47 | 5366538 ambrosiac
ambrosiac's picture

Let it stay at < $80 for a few months and watch Putin's face turn green

http://www.businessinsider.com/russia-will-be-plunged-into-a-recession-i...

Thu, 10/23/2014 - 03:59 | 5366547 zerohedgejjxxzz12
zerohedgejjxxzz12's picture

let it stay under $80 and watch the Bakken play shutdown.
who would be worse off Russia?, Amerka?, Saudi?, Amerka is my answer.

Thu, 10/23/2014 - 04:40 | 5366570 Jano
Jano's picture

fracking going to stop within weeks at the present price level. consequence for USSA?

Thu, 10/23/2014 - 07:56 | 5366712 A82EBA
A82EBA's picture

i wonder if a fracking slowdown is correlated to the sudden interest in coal miners ?

Thu, 10/23/2014 - 03:59 | 5366546 orangegeek
orangegeek's picture

Yep - China the communists are so smart - buying up all the oil at $80 per bbl.  Nevermind that production is  going through the roof and we have a glut.

 

But China's brilliance also surfaced with gold, buying mass amounts at 1920 and all the way down to current levels.  Gold will never get to 600 again - LMFAO.  Never.

 

Should be entertaining to watch China implode soon.

Thu, 10/23/2014 - 05:03 | 5366581 vyeung
vyeung's picture

I guess buying the S&P minis and derivatives is smarter!!!!! Pretty ignorant comments you make.

Thu, 10/23/2014 - 05:37 | 5366588 buzzsaw99
buzzsaw99's picture

Oil prices are manipulated like everything else. Some people naively assume supply/demand has something to do with it. Nope. When consumer demand for manufactured goods gets low the usa, china, etc., drive fuel prices down in hopes consumers will go on a spending spree elsewhere. the fact that it hurts russia is a bonus. they often squeeze refinery margins for the same reason.

Thu, 10/23/2014 - 05:46 | 5366599 Bangalore Equit...
Bangalore Equity Trader's picture

Listen 99.

Let me be real clear. The USSA controls their economy and inflation by manipulating pump price "AND" crude price.

When the need to juice the economy they "FORCE" price downward.

Thu, 10/23/2014 - 06:53 | 5366643 gswifty
gswifty's picture

Black gold.

Thu, 10/23/2014 - 08:40 | 5366824 HandyCrapper
HandyCrapper's picture

Can't rule the world on MSG alone.

Thu, 10/23/2014 - 14:17 | 5368259 JohninMK
JohninMK's picture

No flies on the Chinese, they have just dumped another load of dollars in front of the US's eyes.

Gold, oil, overseas real estate and infrastructure, got to turn them oneday probably worthless dollars into something better before anyone puts two and two together.

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