The US has less than 500 million barrels of oil in commercial storage.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCESTUS1&f=M
That sounds like a lot, but for the entire country, that is less than a less than a single month of supply.
http://www.eia.gov/petroleum/weekly/images/crdsusm.gif
This facility is just a little piece of that supply chain.
Thanks!
It looks like salad days for you guys downstream right now. From my upstream perspective it is usually salad days for you though I’m sure that perspective is seen through rose colored glasses where you are concerned.
I terribly misread the tea leaves this time. I thought that we would be coming back into balance by now and that we would be seeing solid 70s with brightening prospects but not a surge. I figured the firming would take place about now and that the increase would be moderated by the end of summer driving season and the turn-arounds in refineries of winter.
I did not see the Saudis increasing production so much. Didn’t think they had the capacity. I also figured the Iranian picture was already factored in. The only thing I got right or close was consumption and I underestimated the growth of that.
Some of the bigger players... corporations... I work with see firming next year in the summer season making this a nearly two year bottom. With oil, that is too far out. Too much can happen we just don’t know about. It is a geopolitical and fundamentals driven commodity with long term development factors. Geopolitical trumps all.
The bigger players are now starting to batten down the hatches. I’m seeing it in manufacturing and service companies and hearing it in the operator side. We will see slaughter in the upstream by fall if things don’t improve as they feel the need to entrench of for a very long winter when they finish the first draft of the planning cycle this next month.
I simply do not see how operators are keeping any of the drill ships running. It is not just the cost it is the horrendous level of trouble costs from what I think is unnecessary complexity coupled with rapidly declining experience levels and manpower cut backs.
They say it is always darkest before the dawn but it has to quit getting darker first.
What is the next layer down from this gif?