• 2 minutes Oil prices going down
  • 11 minutes China & India in talks to form anti-OPEC
  • 16 minutes When will oil demand start declining due to EVs?
  • 6 hours Oil prices going down
  • 11 hours We Need A Lasting Solution To The Lies Told By Big Oil and API
  • 11 hours Another WTH? Example of Cheap Renewables
  • 3 days Bullish and bearish outlook for oil
  • 3 days Rolls Royce shedding 4,600 jobs
  • 1 day Trump Hits China With Tariffs On $50 Billion Of Goods
  • 2 hours What If Canada Had Wind and Not Oilsands?
  • 2 days When will oil demand start declining due to EVs?
  • 11 hours The Wonderful U.S. Oil Trade Deficit with Canada
  • 2 days Russia's Rosneft 'Comfortable' With $70-$80 Oil Ahead of OPEC Talks
  • 4 hours China & India in talks to form anti-OPEC
  • 10 hours The Permian Mystery
  • 4 hours No LNG Pipelines? Let the Trucks Roll In
  • 3 days U.S. Cars Will No Longer Need 55mpg Fuel Efficiency By 2025.
  • 3 days Epic Fail as Solar Crashes and Wind Refuses to Blow
  • 1 day Gazprom Exports to EU Hit Record
Alt Text

Was This Just A Temporary Pullback In Oil?

Technical analysis shows that despite…

Alt Text

Iran: Oil Prices Could Jump To $140 On U.S. Sanctions

Iran’s OPEC governor Hossein Kazempour…

Alt Text

Oil Sinks Deeper On OPEC Concerns

The oil price rally has…

Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

More Info

Trending Discussions

Offshore Crude Backlog Haunts Oil Price Recovery

Offshore

Oil is trying to recover after yesterday's shellacking, but oversupply fears still remain. As rumors and murmurs circulate about an extension to the OPEC production cut, hark, here are five things to consider in oil markets today:

1) Yesterday we mentioned how we're seeing a strong influx of arrivals into the U.S. Gulf Coast from the Middle East this week (something we originally alluded to last month). This is in response to an increase in March loadings heading to the U.S., after Middle East producers favored sending crude to Asia in January and February.

That said, while we are seeing increasing arrivals into the U.S. Gulf, it may not necessarily translate to higher imports this week. After reaching its lowest point since last September early last week, crude waiting offshore in the U.S. Gulf has been rising, up over 9 million barrels in the last ten days:

(Click to enlarge)

2) We've discussed recently here how more Latin American and West African barrels have been heading towards Asia, pulled by favorable price spreads (i.e., Brent and WTI versus the Dubai-Oman benchmark). It is important to remember, however, that crude flows do come in the other direction.

As our ClipperData illustrate below, the U.S. receives on average one and a half million barrels each month from Southeast Asia, with the majority of this coming from Indonesia (and light sweet Minas crude at that). We also see grades from Vietnam, Malaysia and Thailand, which - along with the Indonesian grades - generally all head to the Hawaiian Islands.

We do occasionally see some Southeast Asian barrels arrive on the West Coast, however. For example, Kutubu blend from Papua New Guinea was discharged at BP's Ferndale refinery this month. This is the first arrival of the light crude grade to U.S. shores on our records.

(Click to enlarge) Related: Oil Industry Worried About Trump’s “Buy American”

3) The chart below is from this Bloomberg article, which endorses our well-worn mantra that OPEC members had the 'pedal to the metal' at the end of last year: they exported as much as they possibly could. Hence, all of the cartel's efforts in the first half of this year is being spent unwinding the impact of that exuberance.

Bloomberg uses the IEA's supply and demand projections to highlight that it will take until the end of June for OPEC production cuts to bring stockpiles back in line with December's level. This will leave inventories still some 200 million barrels above the 5-year average, leaving OPEC a lot of work still to do to achieve their goal. From this data point alone, it seems fair to assume that OPEC will roll over their production cut deal into the second half of the year.

(Click to enlarge) 

4) The latest drilling productivity report from the EIA was particularly interesting due to its latest data on drilled but uncompleted wells (DUCs, quack). Not only are we seeing DUCs rise to a new record in the Permian Basin (hark, up 90 - or 5 percent - to 1864 wells), but Eagle Ford is also rising too (hark, up 26 to 1,285). The ability to bring incremental volume to market as needed only further endorses expectations for an amply-supplied domestic market going forward.

(Click to enlarge)  Related: Does This Reversal Show A Crack In The Philippines’ War On Mining

5) Finally, stat of the day comes from this article about Venezuela. Eighteen of PdVSA's 31 oil tankers were out of commission at the end of March due to either being in disrepair, or needing to be cleaned. Vessels are crude-stained, and need to be cleaned before entering foreign ports.

To make up for the lost tankers, PdVSA is leasing more than 50 tankers, at a cost of up to $1 million a month per vessel. With the oil sector accounting for ~90 percent of Venezuela's government revenues, it appears both its oil sector and broader economy are spiraling out of control.

By Matt Smith

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News