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Crude Plunges To Cycle Lows After Biggest Inventory Build In 4 Months Despite Ongoing Production Cuts
Following last night's API inventory 'draw', DOE reported a much larger than expected build of 2.62 million barrels in crude inventory - the biggest weekly build since April. WTI Crude prices are tumbing on the news to new cycle lows. However, it is worth noting that US crude production fell for the 3rd wek in the last 4 to its lowest in over 3 months. This is the biggest 4-week production decline since Oct 2013.
WTI Crude reacted immediately and tumbled..
Despite the 3rd week in the last 4 of production declines... This is the biggest 4-week decline since Oct 2013
Crude prices are not helped by the fact that (as Bloomberg reports)
Angola will export the most crude in almost four years in October as the OPEC member satisfies Asian demand and offsets diminished revenue from lower oil prices.
Africa’s second-largest producer plans to ship 1.83 million barrels a day in October, the most since November 2011, according to a preliminary loading program obtained by Bloomberg. This compares with 1.77 million barrels a day in September.
Angola slashed its budget by a quarter in response to the slump in crude prices, which have lost more than 50 percent in the past year. The African nation’s bid to recapture revenues is supported by demand in China, the world’s second-biggest oil-consumer, which imported near-record levels of crude in July.
“Angola continues to profit mainly from Chinese demand, in addition to some demand from India and Indonesia,” said Ehsan Ul-Haq, an analyst at KBC Economics in London.
Charts: Bloomberg
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larger than expected build of 2.62 million barrels in crude inventory
That represents 40 minutes of world's daily oil production. But apparently enough to drop oil substantially.
Let's be clear. This oil collapse has nothing to do with supply, but it does have everything to do with credit and demand destruction. Margin calls are a bitch.
Neither oil nor copper are looking spry at the moment, so you may have a valid point there.
Regards,
Cooter
The commodity market is about to meet economic reality head on, should be an awesome crash.....
"Staycations" are the norm here in my neck of the woods.
ROFL. oil is only over $40 because of bubblenomics. $20-30 is where it would be if the economy wasnt being fueled by bubbles every few years. get ready for a reality check.
Low interest rates are driving the bubble - which helped increase drilling - way above what would have been done -
I think if interest rates would have been higher over the last 7 years many of these wells would not have been drilled -
So the no reason for Saudi Arabia to go balls to the walls on production to protect its market share.
Oil would be higher if rates were not kept a zero -
Oil has been at $100 for the past five years with interest rates near zero. Did it just notice and all of a sudden decide to drop by 60%?
How many wells were drilled with low interest rate loans that would never have been drilled if rates were higher?
What caused the big price drop?
Saudi increasing production to protect market share from all of the fracking wells drilled with low interest loans.
If you didn't have cheap money - you wouldn't have had these wells drilled and Saudi oil would not have been increased to protect market share.
Seems pretty straight forward to me - over supply caused by malinvestment in oil producing assets combined with Saudi desire to protect their market share.
Next up on the horizon... "refracking"... which might be two-thirds cheaper than drilling new wells. Gotta keep that glut growing in the race to $0 per bbl !
http://fuelfix.com/blog/2015/08/17/drillers-hope-re-fracking-will-usher-...
Invest wisely.
Would Houston real estate be a wise investment?
Does Boy George work for the DOE?
Obama is always looking for a few good "men".
https://www.youtube.com/watch?v=NVnfrw2nDFA
Yeah imports were 8mmbbl/day last week which is equal to the highest level from last spring when oil was being hammered down. I think the production declines are the biggest factor. Once we start seeing that on a continuous basis, the storage will start dropping irrespective of imports.
Read Dr. Engali comment above. It will control the price of everything way before production or some big ass storage facility. All of you accepted their paper for oil now you will have to deal with their pricing as it will not make mathematical sense. This is how our world works.
Storage may start dropping in the spring, but we're about to enter serious inventory build season in early October. And Cushing is stuck stubbornly at 81% full, while last year at this exact time it was 28% full. Oil will start overflowing into the streets of Cushing by the first week in January...
Meanwhile, gas has tumbled down to 2.91 a gal. for us. That's a huge 15 cent drop this summer. I think I'll take my savings and buy a Zagnut.
do you hear that mr. anderson? that is the sound of thousands of stripper wells going silent. it isn't worth fixing shit at $40/bbl.
Why fill up the tank if the wheels are falling off?