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"Oil Bears May Not Hibernate" As Inventories Swell To Record 3 Billion Barrels

Tyler Durden's picture




 

In true stop-running algo common sense, WTI crude jumped overnight, back above $42 briefly. However, a double whammy of warnings from IEA (of a "massive cushion" of 3 billion barrels worldwide) and the highest volume of supertankers for this time of year since 2013 has sent crude sliding back below $42.

 

 

As Bloomberg reports,

Oil stockpiles have swollen to a record of almost 3 billion barrels because of strong production in OPEC and elsewhere, potentially deepening the rout in prices, according to the International Energy Agency.

 

This “massive cushion has inflated” on record supplies from Iraq, Russia and Saudi Arabia, even as world fuel demand grows at the fastest pace in five years, the agency said. Still, the IEA predicts that supplies outside the Organization of Petroleum Exporting Countries will decline next year by the most since 1992 as low crude prices take their toll on the U.S. shale oil industry.

 

“Brimming crude oil stocks” offer “an unprecedented buffer against geopolitical shocks or unexpected supply disruptions,” the Paris-based agency said in its monthly market report. With supplies of winter fuels also plentiful, “oil-market bears may choose not to hibernate.”

 

Total oil inventories in developed nations increased by 13.8 million barrels to about 3 billion in September, a month when they typically decline, according to the agency.

 

 

The pace of gains slowed to 1.6 million barrels a day in the third quarter, from 2.3 million a day in the second, although growth remained “significantly above the historical average.” There are signs the some fuel-storage depots in the eastern hemisphere have been filled to capacity, it said.

 

 

 

 

And the backlog of SuperTankers continues to surge - to record highs for this time of year...

31 very large crude carriers head to U.S. ports, highest since last May and most for time of year in data going back to 2013, ship tracking information compiled by Bloomberg shows.

 

 

In fact some firms ar enow breaking charters...Frontline terminates long term charter for tanker Mindanao

 

Frontline agreed with Ship Finance International Limited to terminate the long term charter for Suezmax tanker Mindanao, and will receive a compensation payment of approximately $3.3 million from Ship Finance for termination of current charter

 

Following this termination, the number of vessels on charter from Ship Finance will be reduced to 14 vessels, including 12 VLCCs and two Suezmax tankers

 

The stock buffer is bearish and will probably set a lid on how much higher prices can go in 2016,” Torbjoern Kjus, an analyst at DNB ASA in Oslo, said by phone. “There’s a sizeable risk that we could run totally full,” in terms of storage capacity, he said

Charts: Bloomberg

 

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Fri, 11/13/2015 - 09:22 | 6785957 Gatos Locos
Gatos Locos's picture

What to do about Venezuela?

Fri, 11/13/2015 - 09:23 | 6785970 VinceFostersGhost
VinceFostersGhost's picture

 

 

Just let them go.....sometimes you've got to hit rock bottom.

Fri, 11/13/2015 - 09:26 | 6785972 Looney
Looney's picture

So, with the daily consumption of 100 million barrels, the inventories of 3 billion barrels make it 300 days’ worth of oil in storage?


THAT gives a whole new meaning to the “channel stuffing”!   ;-)


Looney

Fri, 11/13/2015 - 09:41 | 6786034 hairball48
hairball48's picture

Are you a "millenial"? New math?

3/.1=30 not 300

Fri, 11/13/2015 - 09:49 | 6786064 Looney
Looney's picture

Oops! My bad, but I can blame it on double-seasonal adjustments.  ;-)

Looney

Fri, 11/13/2015 - 09:56 | 6786099 new game
new game's picture

hmmm, wonder what max storage capcity is? or is that a wondering number too...

get the fed involved, they could buy excess inventory and "put" it on their balance stmnt, ha...

Fri, 11/13/2015 - 10:11 | 6786163 Baa baa
Baa baa's picture

Start fillin' those pipelines.

Fri, 11/13/2015 - 10:14 | 6786173 FMR Bankster
FMR Bankster's picture

Inventory levels are high but doesn't "the highest levels since 2013" mean the same thing as more than last year?

Fri, 11/13/2015 - 12:16 | 6786671 Gohigher
Gohigher's picture

LOL, ITS the "weather".

Fri, 11/13/2015 - 14:33 | 6787233 Angry Plant
Angry Plant's picture

Think of it as it would take eight million barrels a day drop for a year to use all three billion. So roughly 8% of total consumption.

Fri, 11/13/2015 - 09:58 | 6786111 Big_Hitman
Big_Hitman's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.wallstreet34.com

Fri, 11/13/2015 - 12:15 | 6786660 venturen
venturen's picture

does it involve your sister?

Fri, 11/13/2015 - 09:59 | 6786120 Niall Of The Ni...
Niall Of The Nine Hostages's picture

If Uncle Sugar were serious about making the world safe for democracy, what should have been done in Chavez's lifetime---invade, kill the reject from Idiocracy running the place and allow Venezuelans with an IQ above room temperature to pick a replacement. Offing Chavez would have taken a matter of hours.

Back on planet earth, pushing Stephen Harper out was a far bigger priority for the House Negro than ridding the planet of unrepentant Marxists like Chavez or Maduro.

My guess? The worse shape Caracas is in when Maduro finally goes, the cheaper it will be for Goldman to buy the place up.

Fri, 11/13/2015 - 10:10 | 6786158 Baa baa
Baa baa's picture

"If Uncle Sugar were serious about making the world safe for democracy..."

Are you kidding? Surely...

Fri, 11/13/2015 - 10:59 | 6786374 lunaticfringe
lunaticfringe's picture

My suggestion would be to layoff the xanax for a bit.

Thu, 11/19/2015 - 19:25 | 6815503 shovelhead
shovelhead's picture

In Venezuela you can fill your tank for a roll of toilet paper.

Fri, 11/13/2015 - 09:23 | 6785965 buzzsaw99
buzzsaw99's picture

the money maggots are doing a wonderful job mismanaging the real eCONoME.

Fri, 11/13/2015 - 09:24 | 6785975 VinceFostersGhost
VinceFostersGhost's picture

 

 

When the 2 miles of Iranian tankers hit Galveston.....there's gonna be one hell of a traffic jam.

Fri, 11/13/2015 - 10:04 | 6786140 Baa baa
Baa baa's picture

Maybe 40 years ago.

Fri, 11/13/2015 - 11:22 | 6786472 HardlyZero
HardlyZero's picture

Spot price is going to do some wild thing all the way to the bottom.

While shale, EM sellers (Venezuela, Iran, Brazil, etc.), and spot price all do the limbo...some may die on the vine.

Damn that spot !

ERY and EDZ look tempting.

Fri, 11/13/2015 - 09:36 | 6786011 Grandad Grumps
Grandad Grumps's picture

An up vote for the term "money maggots". It is an apt description given that we are to "give unto Caesar what is Caesar's".

What do maggots feed on? lol ... very appropriate.

Fri, 11/13/2015 - 09:29 | 6785973 Dr. Engali
Dr. Engali's picture

I wonder how many tankers the squid is buying up at these prices  before they run up the cost in the upcoming war.

Fri, 11/13/2015 - 09:38 | 6786000 Quinvarius
Quinvarius's picture

If oil is not already up on the mid east carnage, it is not going to go up. And the "petrodollar" if there is such a thing, should be impacting on the core of the planet.  BUt the petro dollar has been replaced by the "casino dollar".

Fri, 11/13/2015 - 09:39 | 6786023 kralizec
kralizec's picture

Sure, but where are the puppetmasters going to order Peace Prize to strike...and how is that going to help or hurt the supposed free and fair election festivities in 2016?  The Kabuki is going to be top shelf, yes?  Something has to be done to rescue the Fed from itself!

*Note to self: Review SHTF Prep

Fri, 11/13/2015 - 09:59 | 6786119 new game
new game's picture

using oil to fight for oil, how ironic...

self fulfilling prophecy

demand baby demand

all financed by da fed(ultimately)

fucked up 

Fri, 11/13/2015 - 10:00 | 6786123 new game
new game's picture

certainly a buy at the lows coming our way...

Fri, 11/13/2015 - 09:27 | 6785984 Peak Finance
Peak Finance's picture

We are witnessing the coolest game of financial chicken that I can ever remember.

US Shale vs Saudis with both feet on the gas pedal aiming straight for each other, who blinks first? 

 

Fri, 11/13/2015 - 10:55 | 6786353 herkomilchen
herkomilchen's picture

Given shale has a far higher cost of production, I don't see how that is a question.

Fri, 11/13/2015 - 09:31 | 6785993 bmr22
bmr22's picture

Yet gas went up 5 cents in the last week here

Fri, 11/13/2015 - 09:37 | 6786020 wmbz
wmbz's picture

I was in S.Fla. a few days ago, regular $2.79. Here in central S.Carolina $1.89. Crazy the price shifts when you travel around.

Fri, 11/13/2015 - 09:42 | 6786038 Arnold
Arnold's picture

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=606

 

Tax is the difference.

You pay the tax and the gasoline is free.

Fri, 11/13/2015 - 10:47 | 6786319 More Ammo
More Ammo's picture

You don't know how right you are.

Fri, 11/13/2015 - 09:39 | 6785999 Grandad Grumps
Grandad Grumps's picture

This too most likely is manipulative propaganda. How many tankers are usually there? I have been in Singapore many, many times when the ocean off the coast is just loaded with ships sitting there, waiting for something. It is odd if this is not the case. Based on some of the pictures of tankers I have seen, it is clear that they are empty, not full (yes, there is a visible difference you propagandist clowns). The lines of ships may simply be stock photos.

... but that does not fit the narrative. The narrative is that there is a fundamental reason for price. There is a fundamental reason for price, but it is not supply and demand. The fundamental reason for price is not the free market. The fundamental reasons are central planning, greed, power and attacks on those dependent on oil production.

We are all price takers, not price makers. That does not mean that price makers do not exist.

Fri, 11/13/2015 - 09:37 | 6786014 Francis Marx
Francis Marx's picture

The spoofing "up" in oil has been incredible over the past many months. I would guess a lot of dark pools out there and the Gov behind it as well.

Fri, 11/13/2015 - 11:19 | 6786337 roccman
roccman's picture

October 1973 - $/BBL= $2.59

December 1974 - $/BBL = $11.65

400% increase

The 70s was a political oil shock.

This won't be your father's oil shock.

Fri, 11/13/2015 - 12:16 | 6786670 venturen
venturen's picture

I bet you a $1 it see a 20 handle

Fri, 11/13/2015 - 13:26 | 6786932 roccman
roccman's picture

do you think 20 is post something critical blowing up?

 

see - oil is not really the issue - population is - but we eat oil - so the two are tied.

 

it would seem to me that once a few billion are culled - because of oil shock (best way to kill off a population is starvation - then desease - then war) - oil supplies would exceed demand.

 

peak oil/resources is only a temporary condition - temporarily.

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