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Mon Jun 19, 2017, 11:14 AM

Oil Tanker Storage Hits 2017 Record Dispite OPEC Cuts

Source: Bloomberg News

Oil traders are resorting to storing more and more oil at sea amid swelling output in the Atlantic region, a sign the market is far from the kind of re-balancing that OPEC would have hoped for when the group set out last year to bring down global stockpiles.

The amount of oil stored in tankers reached a 2017 high of 111.9 million barrels earlier this month, according to Paris-based tracking company Kpler SAS. Higher volumes of storage in the North Sea, Singapore and Iran account for most of the increase.

The build-up occurs even as the Organization of Petroleum Exporting Countries and 11 other nations led by Russia cut supplies. Since the beginning of the year, those nations have attempted to trim nearly 1.8 million barrels a day from the market, though higher output in the U.S. and Africa and sluggish demand in Asia have all helped to undermine their efforts.

“If anything, it shows that OPEC cuts still aren’t having enough of an impact,” Olivier Jakob, managing director of consultant Petromatrix GmbH, said of the buildup at sea. “The pressure is coming from the Atlantic Basin,” where there are additional supplies, he said.



Read more: https://www.bloomberg.com/news/articles/2017-06-19/oil-tankers-store-most-oil-this-year-as-glut-proves-hard-to-kill



So, Oil is also stored in oil tankers waiting to unload. I guess this means that some don't unload, those ships become storage facilities. It all means.....too much oil..... "Opec duts aren't have enough of an impact" That means that oil will remain relatively cheap for a while. Who knows how long or how cheap..? And what is the definition of ..."relatively cheap?

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Reply Oil Tanker Storage Hits 2017 Record Dispite OPEC Cuts (Original post)
Stuart G Jun 2017 OP
Marthe48 Jun 2017 #1
Sen. Walter Sobchak Jun 2017 #2
MIKE UU Jun 2017 #3
Yavin4 Jun 2017 #4
WhiteTara Jun 2017 #5
ToxMarz Jun 2017 #6
defacto7 Jun 2017 #7

Response to Stuart G (Original post)

Mon Jun 19, 2017, 11:27 AM

1. Not only solar and wind

but all the wage and job cuts so the normal person can afford a house or a car, but not both. The rich can drive 1 car at a time. There aren't that many rich people. The markets will shrink with less households earning a living wage.

Trickle down doesn't work. Trickle up might destroy the rich.

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Response to Stuart G (Original post)

Mon Jun 19, 2017, 12:06 PM

2. Lots of oil is being hoarded anticipating a geopolitical event will cause a sudden price surge

Oil traded with a risk-premium for the better part of a decade, but the American fracking boom and associated glut has stripped that away even as geopolitical risk of all kinds went berserk.

It's a stupid strategy.

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Response to Stuart G (Original post)

Mon Jun 19, 2017, 12:22 PM

3. Miles of rail tankers along I5

That's interesting, I was wondering why all the rail tankers parked along I5 corridor in South West Wa? That was where they parked a lot of the empty box cars during the 2008 recession for this area. Are they empty or full?

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Response to Stuart G (Original post)

Mon Jun 19, 2017, 12:37 PM

4. The world is slowly becoming more fuel efficient, esp. cars, homes, etc.

We don't need as much oil as before.

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Response to Stuart G (Original post)

Mon Jun 19, 2017, 12:46 PM

5. Why aren't prices dropping?

They were slightly over a dollar a couple of years ago and now they are going up and up in our neighborhood.

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Response to Stuart G (Original post)

Mon Jun 19, 2017, 03:11 PM

6. Something Stunning Is Taking Place Off The Coast Of Singapore

This is from a year ago, but explains quite well what they are doing (and kind of looks like they may be just kicking their problem down the road)

http://www.zerohedge.com/news/2016-05-20/something-stunning-taking-place-coast-singapore


....Still, with record amounts of oil stored offshore and with the profit on such storage now shifting into a loss, many are scratching their heads how much longer this imbalanced, and bank funded, situation can persist.

"Floating storage is unattractive economically, given the current term structure in crude futures," BMI Research said this week. Despite this, BMI said that "the volume of crude in floating storage has risen sharply in recent months," adding that the phenomenon was global, with floating storage up 19.5 percent between the first quarters of 2015 and 2016.

"There is clearly still far too much physical crude going around for the glut to be over," said the European oil trader after flying in to Singapore.

The trader's conclusion: "And the paper market seems blissfully unaware of it."

He is right... for now. Because all that will take for even the algos to give up their relentless upward momentum, is for some of these tens of millions of barrels to finally come onshore, which now that contango is no longer profitable, is just a matter of time.

In the meantime, just keep track of the unprecedented parking lot of ships off the coast of Singapore: the larger it gets, the more violent the price drop will be once banks say "no more" to funding money losing charters.

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Response to Stuart G (Original post)

Mon Jun 19, 2017, 06:13 PM

7. This is probably simplistic....

So, they decide to bring it ashore, the price of oil plummits, people in the short run buy larger gas guzzlers, the solar and wind industry goes into recession or crashes, air polution skyrockets, small oil producers are gutted, large producers including Russia stay afloat due to their large capacity, oil remains the fuel standard, dilling the arctic etc forge ahead, OPEC nations fail. In the long run, Russia and Exxon rule as planned....
Then we all die.

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