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Super-Tanker Surge Signals More Crude Carnage To Come
"The supply of oil continues to build," warns the CEO of one super-tanker fleet, and "all of this oil needs to go somewhere," which is why the surge in super-tankers to a seven year high strong suggests all is not well in the world's hopeful 'demand' picture. With charter rates up a stunning 57% in the last few weeks with millions of barrels being stored on ships is another indication that the oil glut is yet to dissipate (and in fact, as Bloomberg reports, is getting worse - with almost half a billion barrels of oil in transit to buyers at the start of June, the most this year). With OPEC's meeting around the corner, a sudden realization of this rising glut may send prices plummeting once again.
Four months into oil’s rebound from a six-year low, the tanker market is sending a clear signal that the rally is under threat. As Bloomberg reports,
A sudden surge in demand for supertankers drove benchmark charter rates 57 percent higher in the two weeks through May 20. OPEC will have almost half a billion barrels of oil in transit to buyers at the start of June, the most this year, while analysts say about 20 million barrels is being stored on ships in another indication the glut has yet to dissipate.
The Organization of Petroleum Exporting Countries is pumping the most oil in more than two years, determined to defend market share rather than prices. A record cut to the number of active U.S. drilling rigs and billions of dollars of spending reductions by companies since last year’s price plunge has yet to translate into a slump in barrels produced. The world is pumping about 1.9 million barrels a day more crude than it needs, according to Goldman Sachs Group Inc.
“Supply of oil continues to build,” said Paddy Rodgers, the chief executive officer of Antwerp, Belgium-based Euronav NV, whose supertanker fleet can haul 56 million barrels of crude. “All of this oil needs to go somewhere,” he wrote in an e-mail May 19.
Daily rates for supertankers on the industry’s benchmark route reached $83,412 on May 20, from $52,987 on May 6, according to the Baltic Exchange in London. While rates since retreated to $65,784, they’re still the highest for this time of year since at least 2008.
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Spare tanker capacity in the Middle East has seldom been tighter. The combined excess of ships competing for the region’s exports stood at 6 percent last week, the lowest for the time of year in Bloomberg surveys of shipbrokers that started in 2009.
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“The summer is not usually the time when rates really should go high,” Odysseus Valatsas, chartering manager at Dynacom Tankers Management in Glyfada, Greece, said by phone May 21.
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Last night's API inventory build also throws the "peak production" hopers meme under the bus.
Of course, for those looking for a silver lining here, there is always the kiss of death to super-tanker fleet operators...
Gartman: "Long of Seven Units of Oil Tanker Equities; Short of the S&P futures"
— zerohedge (@zerohedge) May 26, 2015
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I keep seeing lots and lots of offsite brand new cars sitting/hiding from the dealer lots. And I am talking BMW too. Somethings big and bad is coming this way soon.
I remember how ZH continuosly warned from 2010-2012 how housing prices would never recover because of all the "shadow inventory" that was going to hit the market if prices ever ticked up.
But accountability ruins the game doesn't it?
Home prices didn't recover for middle America. I sold my home for a $20k loss in a pure middle class town last year and I bought it at the supposed bottom of the market.
Paid $138k, sold for $118k. Percentage wise that is a huge loss for a fully updated home. Chinese and Russians don't want to buy investment property in middle class Ohio.
Ohio market is flat. We have two more houses to unload. Under tenant leasing status. In 2016, the kids house near Akron University. They finally graduate. That will pull a positive investment (house is immaculate). Medina home, maybe 2-3% at most.
Ohio has turned into a liberal cesspool. Glad we just rent our homes, don't live in that state anymore. The last house, we have a lifelong tenant. The property has increased in value. He is retired, has been at house for 7+ years.
What part of Ohio? Use the county, not city. I can figure it out. Sorry for the losses.
City-by-city look at house prices, as San Francisco surges again
26 May 2015, by Steve Goldstein (MarketWatch)
http://www.marketwatch.com/story/city-by-city-look-at-house-prices-as-san-francisco-surges-again-2015-05-26
Go ask people in Las Vegas, Phoenix, Miami, and most other areas if home prices recovered or not. It's still substantially lower than the 2006-07 peak. Prices recovered in NYC, SF, LA, and Seattle. My home's appraisal on Zillow is lower than 2007 and I'm in the Northern Dallas suburbs, supposedly one of the stronger RE areas in the country. The people under water cannot sell. That's why median home prices are up. The people in the lower priced areas are stuck like pigs while those in the hot markets are able to sell, distorting the figures.
unless you are in the above 1M range, you are correct. all others are still in the trash.
So far more oil than this time last year, yet oil remains stubbornly high. We had a price collapse because of oversupply and less demand. The price collapse couldn't increase real demand but a $20 per barrel increase and a $.90 increase for a gallon of gas is supposed to draw down inventory?
The inventory drawdowns in the US happened because the storage facilities are shipping oil to Canada and Mexico to clear space, not because there was increased demand.
Oil should have gone to $25, but that move may have caused some problems with derivatives so the big market players drove the price up to prevent the carnage.
How long will the maritime ships sit out on shore, before the Letter of Credit gets final approval. The other is FAS (Free along Ship).
I've had bad experiences with China. They send you samples prior to container shipment for quality control. The container is paided in full. Then you discover more defective items. On a scale of 10-30%.
These scumbags won't fly a Chinese guy into US Customs. Yet, we fly there to set up business. We get fucked. About 7-10 years ago. Even Mrs Atomizer calls them flaming cunts.
Whoever does business there deserves what they get. Stolen intellectual property, poisoned pet food, and defective products are the norm. Lumber Liquidators is about to get liquidated for their cheap Chinese crap.
We learnt the hard way. That's how you become smarter. :)
Avast! Whatever happn'd tah all them pirates? Arrr!
There was no reason for the PPB to go back up anyway, just a pump and dump.
So surplus oil everywhere and it's $3.23 where I live...? Shouldn't it be like $1.50?
SCAM!
States depend so heavily on the tax revenue from the gas it will never go below a specific price.
And yet ISIS continues to find buyers for the oil it has stolen.
Again more drivel here.....how about demand is surging? EIA goes back and revises on whim US output and Tyler does question it at all after I and others repeatedly say EIA is rigging numbers....what more do u want as this site is agenda driven not objective.