Thursday, August 13, 2009

Oil Save You



Petroleum Stocks are at an all time high dating back to 1990. $70 oil makes no sense.

11 comments:

Lou Minatti said...

Let me be the first to say: Pop goes the bubble.

Lou Minatti said...

And let me add: Peak oilers are as batshit crazy as flat earthers, birthers and truthers.

Rob Dawg said...

Birthers mystify me. If they are right? So?

Spotted Toad said...

Do speculators at Goldman Sachs™ think they can get away with a repeat of last years $150/bbl prices? :-p

Max said...

Here's an anecdote for you: a person I know well who works with certain Bay Area port interests told me he saw a supertanker being filled with crude from storage tanks onshore. The refinery in question was running out of room for refined product storage, and needed to offload the crude. The crude was sold to a trader who plans on floating the tanker offshore for a few months betting on a price increase.

Keep in mind this was crude that was already being held in storage by the refiner, and was sold at market price to a speculator because the refiner was choking on excess supply.

Who needs a Chevy Volt when gas is cheap, right?

s said...

Except that's the raw number - you would expect the stock number to be higher if the sales number were higher (if those doing the storing are rational and we aren't at production limits anyway).

If you use the U.S. Weekly Product Supplied numbers from the same source then the most recent week is 99 days supply in stock, and the local peak was 102 days supply on 6/19. Whereas it reached 106 in 1992 so the all-time (well for as long as that data goes back) highs haven't been taken out.

Of course 80 days is the usual ballpark for most of the 2000s, and we are way above that.

Rob Dawg said...

s is correct. Days supply is a better number albeit subject to wild swings at turning points.

I suspect we'll see 106 eclipsed during the HHO turnover at the refineries.

Peripheral Visionary said...

Not sure when these speculators think they're going to make a mint on oil--November? December? Really? Can they read a commodities price chart? Do they understand the concept of "seasonal variations"?

Best case scenario (for the speculators) is that they make a few bucks if the price goes to $80--next May. And that's a big "if", and that's a lot of expenses for keeping a tanker afloat for nearly a year.

The only other scenario that makes sense is a meltdown in the dollar, but that's an outside chance in the near future (although a near certainty in the long run.) Even so, if the dollar melts down, the world economy, and the value of oil, will likely go down with it.

s said...

And if you are betting on a meltdown in the dollar there are lots of options with much cheaper carrying costs than a keeping a tanker of oil afloat.

Peripheral Visionary said...

Rob, on the "Birthers", at some level I think they're simply wishing that the results of the 2008 election would simply go away. That, obviously, isn't going to happen, and it's time to come to grips with reality--but then, some people always liked conspiracyland more than they liked reality. I suspect that we're going to have to put up with them for the next few years, just as we've had to put up with the "Truthers" these last few years.

Lou Minatti said...
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