Posted on 05/15/2009 9:39:35 AM PDT by TigerLikesRooster
Tight storage may lead to huge oil price drop
Posted by Rune Likvern on May 12, 2009 - 10:00am in The Oil Drum: Europe
Topic: Demand/Consumption
Tags: backwardation, china, china oil storage, contango, oecd, oil prices, original, tanker storage, us oil consumption, us oil storage [list all tags]
The present contango in oil prices bears all the hallmarks of an oil market where supplies are well above present fundamental physical consumption.
The recent large inventory build of petroleum, under a steep contango which now is flattening, within the big oil consumers (like the OECD countries and China) have left some with the expectation that major economies soon will begin to grow again, and that the contango now signals increased oil demand and higher oil prices in the future.
My analysis indicates that in recent months, as much as 2 -3 Mb/d of global petroleum supply has been used to build inventories. This is about to come to an end, because available storage is getting closer and closer to full and contango has begun to flatten. When additions to storage cease, the resulting drop in demand can be expected to lead to substantial downward pressure on oil prices.
(Excerpt) Read more at europe.theoildrum.com ...
Ping!
I hope it’s in time for 4th of July! We’re pulling a camper up north and it can be pricey,
“See the USA in a Chevrolet...”
No, wait.
“See the PRC in a GMC ...”
How’s that?
Ditto. We’re taking our annual “long” trek south to California. But actually, I’d hope it eases the crunch on the airlines.
the resulting drop in demand can be expected to lead to substantial downward pressure on oil prices.
That would be nice if it were not for the fact Erkel will add $5.oo dollars a gallon in taxes!
Cool. My tactical Diesel reserve is likely to need refilling towards the end of the summer to get through the worst of the Hurricane Season.
LOL! Yeah, that’s how it used to be.
I'm working to corner the market on 1990/1991 Suburbans in excellent body condition to see me through the next 30 years. I'll be seeing the USA in GMCs and Chevrolets for a while yet.
“You can trust the man, the man who wears the star
The BIG BRIGHT TEXACO STAR!”
"Where's the Fire Chief?", as he gives you the ticket.
“Fire Chief” —> “Fire, Chief”
I’m guessing that speculators are stashing oil away in case Israel hits Iran and Iran’s response disrupts oil pumping and transport.
If GM can just hang on by its fingernails, then ramp up production SUVs, pick-ups and Hummers.
Of course, as posted above, Urkel Maobama will likely jack up taxes and soak up at least all of the benefit of the price decline.
Good article.
El Nino is coming back, the hurricane season may be quite quiet.
HAHAHAHAHAHAHAHA!!!!!!!!!!!!!
Anybody who thinks those gangsters who manipulate the petro-energy markets have ANY intention of allowing oil prices to deprecitate would probably buy a certain bridge in Brooklyn.
From the Arab Oil Shieks to the investors in oil futures, they all manipulate the markets. They are doing it now, they did it last year and they will never stop.
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