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Chinese Oil Re-Stocking Is Over: Inbound VLCCs Drop To 5-Month Lows
In October 2014, we noted the massive surge (amid a slowing economy) in VLCCs bound for China as they began rebuilding their Strategic Petroleum Reserve, buying the newly low priced crude providing 'artificial' demand not reflective of actual current activity. Crude prices continued to drop and China-bound tankers remained high. But, as Bloomberg notes, this week saw the number of supertankers heading to China drop to 62 - the lowest since September 19th (before China began its restocking efforts) - strongly suggesting that 'artificial demand' has been removed from the global oil market.
Oct 2014: 89 VLCCs inbound for China...
Feb 20th 2015: 27 VLCCs inbound for China (according to BMAP)
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As Bloomberg reports,
The number of supertankers sailing to Chinese ports fell to the lowest in five months in a weekly snapshot of vessel movements compiled by Bloomberg.
There were 62 very large crude carriers bound for the Asian country as of about 8:30 a.m. in London on Feb. 20, compared with 63 a week earlier, according to signals from the ships compiled by Bloomberg from IHS Maritime data. That’s the lowest since Sept. 19. The vessels would deliver 124 million barrels of oil, assuming each hauled a standard 2 million-barrel cargo.
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With production hitting record highs, and demand (at 2 million barrels per inbound VLCC dropping) one could be forgiven for thinking crude prices are set to drop further... and perhaps compress Brent-WTI...
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funny how the greek soap opera is overshadowing the real data of world macro sinking like the titanic. wonder if they can keep oil above 50 at the close.
A couple of arbitrage factors have been holding oil up as well. As mentioned in the article, Brent crude has been as much as $10 above WTI recently. A "fair value" might be 1-5, so the pair trade is to sell Brent and buy WTI, but also the one year future has been $10 over spot. With ZIRP you might expect, $2.00. Again the pair trade is sell the future, buy nearest contract month.
Both of these should be narrowing, putting downward pressure on oil.
China lost a lot of money buying all that oil, should have waited to buy at 50% discount.
Der damn dopplegangers.
Let the market sort it out. If it can't then say Fuck IT!!
IF the asshole fed and elites remove the markets ability to be efficient and not let auction rules adjust and balance, then they and we will shortly be on the bad end of the shit stick.
Where's all the oil to $100 pumpers now?
Production is increasing while demand is decreasing. It's easier to pump up paper assets than physical commodities, especially something like oil. There's no GAAP to manipulate and when 93 million barrels are being produced each day. There's nowhere to hide it.
Ok...got enough oil to last for a while huh?...so hows about some Mexicans? We got plenty, they are coming in here in groves!
OIL TO $200!!!
ROFL!!
Oil's down in price. It's time to stop spending the people's "money" on restocking. Restocking will continue at higher prices.
Sincerly,
Government.
time for the US to fill its strategic reserve. a whopping 30 million barrels. and then where is all the surplus oil going to go?
Up Putin's ass it will stored and safe for the next decade.
Groovy, I figured they would run out of storage a month ago at least This will be interesting for the markets since we're close to running out of ships for storage
Now that rig counts are falling, the actual supply will also start to fall as the shale wells drilled last year begin to deplete.
apparently, someone hasnt noticed US productions just keeps increasing, even as rigs are shut down.....
Chinese New Year??
China has been setting up RMB currency hubs everywhere and at least they're smart enough to know that people are watching liquidity at financial centers. At the current time, this makes sense.
You know what would be "neat" to see... How many full VLCC's are currently headed to a destination? China, as one data point, does not indicate a trend. But then again, in the world of being a skeptic, one has to remember to be skeptical of skeptics with an agenda.