From The Wall Street Journal:
A bulge in U.S. oil stockpiles last week pushed the amount of crude in storage closer to record levels, but prices were held in check amid worry that the crisis in Ukraine could crimp Russian exports.
Oil inventories in the U.S. are approaching an all-time high amid a multiyear surge in production, as new technologies have enabled drillers to access crude trapped in shale-oil fields.
Gasoline stockpiles fell less than expected last week, down 200,000 barrels to 210.3 million barrels, the EIA said in its weekly report. Analysts surveyed by The Wall Street Journal had forecast a 1.4 million-barrel drop. On Wednesday, government data showed the biggest one-week increase in U.S. oil stockpiles in 13 years.
Crude-oil stockpiles rose by 10 million barrels last week to 394.1 million barrels, the U.S. Energy Information Administration said. That's 3.4 million barrels below the peak reached in May 2013.
Oil prices, which had been at a six-week high, eased on the news but the market remained alert to escalating tensions in Ukraine.
Light, sweet crude for May delivery settled up a penny at $103.76 a barrel on the New York Mercantile Exchange, after trading as high as $104.99 a barrel. Brent crude on ICE Futures Europe rose 24 cents, or 0.2%, to $109.60 a barrel, a six-week high.
Stockpiles are growing in part because some refineries, which turn crude into gasoline and other products, were shut down for seasonal maintenance. In addition, much of the oil that the U.S. produces is of a different quality than many refineries prefer to process.
Much of the new U.S. oil supply has been stuck in a storage hub in Oklahoma until recently, when a new pipeline to refineries on the Gulf Coast opened. As the oil flows from Cushing, OK, where the Nymex contract is priced, tepid demand for the crude is coming into focus.
Supplies in Cushing fell to the lowest level since 2009 last week, the EIA said, while storage levels in the Gulf Coast hit an all-time high on data going back to 1990.Think about these data points:
- oil inventories are approaching an all-time high
- price of oil at high end of historical range; longest period of high-price oil
- gasoline production is barely keeping up with demand
- gasoline prices are at high end of historical range; over $4.50/gallon in California
- minimal global tensions that could disrupt flow of oil
- gridlock in Washington; lame-duck president with history of dithering
- Yellen reassures investors she is going to prop up the stock market
- Venezuela is about to implode
- Brazil is a bust (with regard to offshore oil)
- Kashagan is a bust
- railroad resurgence in the United States
- Germany turning away from renewable energy
Question: do "we" have the wrong kind of oil, or do "we" have the wrong kind of refinery? By the way, had the Keystone been approved, "we" would have the right kind of refinery.
