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Crude Oil Inventories Surge For 7th Week In A Row To Record Highs Amid Record Production
Oil prices dumped (last night's major 8.9 million barrel inventory build from API), pumped (the Saudi minister claiming "demand is growing" - which just seems like total fiction given economic backdrops and China's VLCC count plunge), and then this morning, dumped setting the scene for this morning's EIA inventory data. Against expectations of an 8 million barrel build, crude inventories saw a 8.43 million barrel build (5 times higher than the 5 year average). Record levels of production and record total inventrory sent WTI plunging out of the gate but it is stabilizing for now...
US Crude oil inventories
US Oil Production hit a new record high... (despite the declining rig count - perhaps finally putting a nail in that meme)...
And Total Oil Inventory hit a new record high - massively higher than seasonal norms...
The reaction - algos gone wild - dump and pump
and the close-up reaction...
Charts: Bloomberg
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Great news for the US consumer and other oil net importer economies.
All the folks can now drive cheaply to their next job interview after getting cut loose by the gas companies!
Edit: And they can get that car for no money down! BOOMSHAKALAKA! Economy fixed, let's go bomb the middle east!
I figure the only real reason that oil went up was that Brent had reached price parity with WTI and that couldn't be allowed. Oil will likely drop to the $40-45 area for awhile before somebody in the OPEC group really panics i.e. Venezuela.
Hell ya!
MOAR money for kewl shit like, um......Hell YA!
This great news meme in respect to low oil prices is bullshit for the most part. Most of the sheep are sheared to the point that a few extra slips of fiat each week are not going to make much difference.
Case in point, my state of IA will likely pass a 10 cent/gallon tax increase for the trans. dept. There went that savings out the tailpipe.
I don't see airfare taking a dump, nor trucking rates......the savings somehow don't make it to grocery store and yet the packages keep getting smaller, or larger with more air depending what you buy.
Great news? It don't mean jack shit.
you absolutely right brother ... these economists talking about all this crap is hilarious ... i really haven't been affording to drive for about 5 yrs now? it's like they are talking about a hologram that in reality disappeared long ago.. i'm hoping maybe in the coming year i can get some kinda case worker who can get me an inside track with an unkle sugar job or something. being gringo, i'm not holding my breath though
Your gas price is only down 10 cents from last summer? Man, that sucks. We are saving more than a dollar here. We wouldn't even notice a 10 cent hike at this point.
Saudi Arabia is using predatory pricing to wipe out fracked oil. The same Saudis who, with the CIA, paid the 9/11 murderers to attack the USA 14 years ago. The captive press in the USA refuses to print anything to inflame the American public, who are now treated like minimum security prison inmates. For another example of corrupt news reporting, look at "Rolling Stone." Anyone else notice that "Rolling Stone" magazine has become a propaganda tool for Obama, with feature articles that push government lies. The current February 26 edition may feature John Belushi on the cover but it has a long and lie-filled article inside on the Pentagon vs. climate change. A previous "Rolling Stone" had a long story on how Homeland Security investigators took down a rogue bunch of Texas cops who were robbing drug dealers (http://www.rollingstone.com/culture/features/americas-dirtiest-cops-cash...). Only passing mention was given to how these fearless investigators forced a madam to go undercover to get the goods on these cops. Left unmentioned was the protection and guns the DEA gives Sinaloa cartel dope dealers, who probably complained to their DEA handlers when their drug mules were robbed. "Rolling Stone," like CNN, is on the government payroll, paid off handsomely to lie to the American public.
Gov. trolls must not be around today. When I make the SA / See Eye A connection, I always get more downers than uppers, thank you very much. I recently read a RS article about Afghanistan which didn't mention US Opiate consumption in conjunction with 'liberation' or, of course, the See Eye A. Made it sound like the poor little (victims) Afghans HAD to resort to poppy growth to make a living. It's a total propaganda rag with a left wing slant.
Isn't rig count a tally of rigs looking for oil? Isn't crude production after the looking when they already found it? Producers won't shut in a producing well, they need to recoups sunk costs and generate the cash flow. They will try to live through preiods of low prices and many were hedged to begin with.
Too much truth. Stop it.
It's called E&P, rigs can be for development of an explored area that is known to have good production. So when a rig is a wildcat, there may not be production associated with that rig and that is the E part. However, a rig drilling in an already explored field is assured of production and that is the P. The rig count cannot tell you where the rig is running so it's just a gross level of drilling activity. I would expect that most rigs are directed at already explored areas right now.
Agree with that.
Way too much emphasis is placed on rig count. It pertains to active rigs searching for new oil, not already on line production.
And pump prices just keep heading north!
Yea! Yea! Alright!
(seasonal refinery shut downs for mainenance, seasonal formulation changes, other bullshit excuses, fuck you)
Breaaking the faith of religious AGW & Peak Oil losers warms my heart.
Peak oil is MAXIMUM production - e.g. oil glut. Just what we have now.
Yes, of course, that makes sense because of the # of drilling operations being shut-down.
Errrr, lag? Rigs are future wells. Drill -> frack -> pump. Right now 100s of wells still awaiting to be fracked, but drilled already.
Gloat at the end of the year when oil is still sub $50 and production keeps rising. Lag indeed.
If the EROI on your ignorance were just a little higher, we wouldn't even need oil.
EROI? What other bed time stories do you enjoy?
Does it suck being in disagreement with reality?
Gettin too cushy in Cushing....
Oil price is holding in the face of this news. Price action is bullish and one should consider going long.
Geopolitical risk is independent of stockpiles, so, you may have a point. Risk is headed up faster than production.
Nations prepping for war. Get ready...
That's all this is. Pentagram is the largest consumer makes sense they need cheap oil.
I'm down with some war, but it seems like we dont make a lot of $$$ with the last few ones...
Is the Preezy in Chief going to help us on this one? Or is he taking the other side of the table?
so why has the price at the pump been going back up?
That sub $2 price was pretty fucking short lived.
How come no one around here ever observes that every ounce of gold mined is added to an already existing above ground inventory that will never be consumed and can only trade hands? On the other hand, oil will be consumed and any existing inventory will be used. So then why shouldn't the price of gold constantly fall due to ever rising inventory of the product?
Conversely, why should large above ground inventories of oil lead to a falling price if the product willl eventually be consumed? Even gold which is never consumed can rise in price in spite of constant yearly additions to it's inventory and it is basically a useless hunk of metal which cannot heat your home or fuel your transportation system.
Because the world population is growing exponentially too, thereby creating more demand. Especially in India & China where they love the stuff. Gold and silver are also used up in industrial applications.
Shale wells have shorter production lives and tapering production.
So...
...what happens when they shutdown the marginal wells and put the money into the high-producing wells???
Seems like you'd get a falling rig count and equal or increasing production...
Who says shale wells have shorter lives? They are new enough that there isn't enough data to support that claim and all wells have tapering production. Finally, marginal wells are not shut down as long as oil is coming out of them because that is money coming out of a hole in the ground. As to putting the rigs to work in known higher producing areas, that is exactly what is going to be done and your conclusion is correct.
Not an expert on the topic. Just regurgitating the often reported differences between shale and conventional wells, and seeing if that narrative matches the evidence.
Seems like it does.
How else do I understand flat or growing production in the face of a radically dropping well count?
I agree with your conclusion as I said. The shale wells are far more productive than conventional wells were and that is borne out by the simple comparison in well count vs. production increases during the shale boom vs. data from past oil booms, particularly the early 80s in Texas. We don't have enough data to say what the life expectancy of a shale well is yet. Gas wells and oil wells are different animals.
wrs1,
With that kind of claim, you need a link or two. Either that or you are pulling it out your ass.
You can chew on this in the meantime:
https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf
Which claim are you referring to? Regarding the last oil price boom in the early 80s, Texas oil production in 1980 was 2.5mmbbl/day with 175,000 oil wells. By 1985 production was 2.3mbbl/day with 210,000 oil wells. This was all conventional vertical wells drilled to about 3000-5000 feet.
Texas production in 2009 was 980k bbl/day with 157,000 producing oil wells. In Sept. 2014 production was 2.8mbbl/day with 185,000 wells. So in conclusion, Texas is pumping more oil with less wells than it was in 1985 when the last boom collapsed, there were nearly 25,000 more wells than there are today producing less oil than today. Or viewed another way, in five years shale has nearly tripled the oil output in Texas with the addition of only 28,500 new wells while from 1980 to 1985, 35,000 new wells netted a loss of 200,000 barrels per day of production. In addition, the last time oil production even doubled in Texas was from 1935 to 1946 when it increased from 1m to 2m barrels per day.
I own both shale and conventional oil wells here in Texas and I wish I had more shale wells.
The actual report:
http://ir.eia.gov/wpsr/wpsrsummary.pdf
Estimates of storage capacity in this country are in the 450-460 million barrel range (not including the Strategic Petroleum Reserve or floating storage). We're up to 434 million barrels based on this latest report. So what happens when we reach the "all full" point in a few weeks?
That is a good question and I will tell you what I think will happen, we won't reach that point but if we do, ships will cease to be unloaded because the pipeline system has to be kept pressurized and flowing so no domestic oil will lose access to the pipelines and no refiner will cut off their intake from the pipelines. Therefre, it will be very bad for the exporters of oil to the US, including all that oil coming by train from the oil sands. The dumping of oil will come to an abrupt halt and we might actually see backwardation in the market with the WTI to Brent gap eliminated.
Someone is making an obvious floor in oil at 48-49 level and not letting it break through that no matter what the news is.
Sometimes that is referred to as the market.
Maybe, but I wouldn't bet on it.
Could also be you don't understand it.
The Saudis are speaking again. I did say their gum flapping or not will control things.
The crude inventory increases are a fraud. The banks are illegally naked shorting crude to lower the price for the purpose of damaging the Russian economy. The act of shorting a market adds market supply but legal shorting does not add to physical supply as it is borrowed. Illegal naked shorting on the other hand adds market supply that doesn't exist. The reason for the drastic increase in crude inventories is because they are counting market inventory that doesn't exist Everyone will find out about this soon enough and it is already starting with some substantial increases at the pump as the initial drop in gas prices caused an increase in demand that cannot be met with paper oil. In the next six to eight months you will see outsize price increases at the pump and physical crude falls off a cliff as shale drilling implodes and the gap between physical crude and paper crude becomes a chasm.
Nothing new here as the banks have done this with precious metals for years and today have a COMEX market trading 10% metal and 90% fantasy. They get away with it because you don't need precious metals to get you to work and back every day, but oil is a whole different animal.
Yep, Evgeny Fedorov thinks so, too.
20 mins.
http://www.youtube.com/watch?v=VT085isnyB0
Good video. I agree on the six months, that is what I have been prediciting as the lenght of time the Saudis can manage this. When the storage is all full, it's over, prices will skyrocket and OPEC will cut back production significantly.