from Global Investing:

The missing barrels of oil

February 24, 2012

Where are the missing barrels of oil, asks Barclays Capital.

Oil inventories in the United States rose sharply last week, with demand for oil products  such as gasoline at the lowest in 15 years and crude stockpiles at the highest since last September. Americans, pinched in the wallet, are clearly cutting back on fuel use.

from Global Investing:

Equities — an ‘even years’ curse?

June 17, 2010

Are global equity markets under an 'Even Years Curse' that sees them underperform bonds in even-numbered years but beat fixed-income returns in odd-numbered ones? After some number-crunching, Fidelity International's' director of asset allocation Trevor Greetham suspects so.

from Commentaries:

OPEC accommodates investor demand

September 10, 2009

By keeping production targets unchanged despite swelling inventories and uncertainty about the outlook for oil consumption, OPEC has decided to accommodate rather than fight investors' demands for a high level of inventories.
Forward cover has crept up to 62 days, well above the long-run average of 52-53 days OPEC members have previously indicated is their target, consistent with stable prices. But further cuts were never seriously on the agenda at this meeting, and seem unlikely to be seriously considered at the next one in December unless there is a shift in sentiment and a price collapse in the meantime.

from Commodity Corner:

Oil Market Contango Widening

July 23, 2009

0709-contango-fig-11The spread between front-month oil futures and contracts for later delivery on the New York Mercantile Exchange (see Fig. 1) has widened dramatically this month. (See Fig. 2)0709-contango-fig-2The widening contango frequently portends a rise in inventories. For example, in Fig. 3, it can be seen that when the discount for fronth-month crude to second-month crude widened to near $4 a barrel earlier this year, inventories jumped to 19-year highs. The relationship between inventories and the outright futures price can be seen in Fig. 4. 0709-contango-fig-30709-contango-fig-41

from John Kemp:

Doing the inventory swing – Sources of GDP growth in the year after recession

June 5, 2009

With a lot of fog drifting across the analytical battlefied, we need to start distinguishing between two statements:
 
(1)  The economy is approaching the cyclical trough;
 
and
 
(2) A strong sustained recovery is set to get underway. 
 
There is good evidence to support proposition (1), but it does not necessarily imply proposition (2).  It is possible to be optimistic the worst of the downturn may now be over (or very nearly so) while remaining cautious about the prospects for recovery when the cyclical turning point is passed. 
 
To understand the point, think back to the last recession.   The National Bureau of Economic Research (NBER), official arbiter of the U.S. business cycle, dates the cyclical trough to November 2001 (eight months after the peak in March 2001 -- and just two months after the attack on the World Trade Centre in New York).  But it was not until more than two years later that there were signs of a strong and sustained recovery. 
 
The fitful nature of the expansion during 2002 and 2003 is why the Fed kept rates low for so long.  In fact, the Fed was still cutting interest rates to 1% in June 2003 because the expansion was so anaemic, and did not feel confident to begin raising them from this ultra-low level until June 2004.   Uncertainty caused by impending war between the United States and Iraq was one factor holding the expansion back, but not the only one.  The recovery failed to become "self-sustaining" for almost three years.  
 
The same could easily happen again. 
 
The attached chartbook is an attempt to look beyond the downswing of the cycle at how the U.S. economy behaves in the first twelve months of recovery.

from John Kemp:

US refining system (week ending 29 May 2009)

June 3, 2009

Crude inventories built (+409,000 b/d), according to the EIA, defying market predictions of a decline (-200,000 b/d).  Imports jumped (+868,000 b/d) to the highest level for four weeks (9.646 million b/d). 
 
Higher crude arrivals were recorded into the PADD III Gulf Coast refining region (+558,000 b/d) and PADD I North-East (+195,000 b/d). But this merely reversed the previous weakness, taking import rates back to year-ago levels, after several weeks in which arrivals had been unusually low.  PADD V West Coast arrivals also rose (+293,000 b/d) but were partly offset by slower imports into PADD II Midwest (-126,000 b/d). 
 
Refinery operating rates continued to rise (+1.15 percentage points) to the highest level this year (86.26%) though rates remain far below last year's level (89.72%). 
 
BUT the jump in refinery operating rates WAS NOT accompanied by an increase in the volume of crude processed.  In fact, crude throughput actually fell marginally (-8,000 b/d).  Instead, non-crude inputs jumped sharply (+203,000 b/d).  The percentage of crude oil in total refinery inputs fell to its lowest level for since mid-Jan and before that for any time in the last five years.  Crude oil inputs accounted for just 96.60% of all refinery inputs last week, down from 98.00% the previous week.  Refiners must have drawn down stocks of other, semi-processed, oils.  But the series is volatile and week-to-week variations tend to reverse rapidly.  Other things being equal, next week should see a sharp increase in reported crude oil processing rates. 
 
Reported gasoline inventories fell (-31,000 b/d).  The substantial gap between reported inventories (-31,000 b/d) and the change (+726,000 b/d) implied by domestic production + imports - product supplied points to continued strong exporting and/or recording errors (-757,000 b/d). 
 
Domestic production fell (-581,000 b/d) and imports slowed (-56,000 b/d) more than offsetting weaker consumption in the holiday-week (-518,000 b/d).  Gasoline stocks were broadly unchanged (203.202 million bbl) down 5.888 million bbl  (-2.8%) compared with last year (209.090 million bbl).  Stocks are relativley low and firmly in the bottom half of the five-year range. 
 
There was no relief on the distillate side.  Stocks continued to build (+237,000 b/d), amid little change in production or imports from the prior week and slackening consumption.  Ultra-low sulphur stocks in PADD I North-East, already +5.664 million bbl (+41%) higher than last at a record 19.976 million bbl continued to trend higher.  Stocks are also far above year-ago levels in PADD II (+4.379 million bbl, +19.5%) and in PADD III (+8.652 million bbl, +42.7%). 
 
In a development that should also worry refiners, stocks of semi-processed "unfinished oils" and miscellenaneous "other oils" continue to rise -- in the case of "other oils" inventories rose +3.600 million (+2.3%) to another record (158.600 million bbl).  The overhang of such "other oils" is now +20.500 million bbl (+14.8%) higher than at the same time last year (138.100 million bbl). 
 
While crude oil inventories look high, the massive stock of refined products, other than gasoline and residual fuel oil, is even larger. 
 
For graphical analysis of this week's EIA report on inventories, production, imports and exports of crude oil and refined products see the links below: 
 
http://graphics.thomsonreuters.com/ce-insight/US-REFINING-SUMMARY.pdf
http://graphics.thomsonreuters.com/ce-insight/EIA-INVENTORIES.pdf
http://graphics.thomsonreuters.com/ce-insight/EIA-CUSHING.pdf
http://graphics.thomsonreuters.com/ce-insight/EIA-PRODUCTION.pdf
http://graphics.thomsonreuters.com/ce-insight/EIA-REFOPRATE.pdf
http://graphics.thomsonreuters.com/ce-insight/EIA-REFTHRUPUT.pdf
http://graphics.thomsonreuters.com/ce-insight/EIA-IMPORTS.pdf
http://graphics.thomsonreuters.com/ce-insight/EIA-EXPORTS.pdf

from Commodity Corner:

Correlation Between Oil and Equities Markets

May 7, 2009

oil-vs-stock-market

Oil prices have been trading in an unusually strong positive correlation with equities markets over the past few months on hopes that signs of an economic recovery could mean a boost for energy demand.

from MacroScope:

“Tinny” signs of recovery

April 9, 2009

One of the most significant comments about the world economy this week may have come from Klaus Kleinfeld, the chief executive officier and president of Alcoa, America's largest aluminium producer. Amid the reporting of  pretty horrible earnings  -- a $497 million net loss versus a year-earlier gain of $303 million -- Kleinfeld said things may not get much worse.

from Commodity Corner:

Rising crude levels test Cushing storage capacity

February 6, 2009

  Falling U.S. fuel demand due to the recession is building inventories and testing capacity limits at the key Cushing, Oklahoma crude storage hub. Crude Storage Levels at Cushing OK