Having said that, a twitter scroll suggests Saudi Arabia has a huge storage/production problem. Saudi continues to increase the number of tankers (VLCCs and ULCCs) carrying oil out of the Mideast. Or better said, independent sources are reporting that. Bloomberg reported another 30+ tankers are now en route to the US.
There are currently -- just a single snapshot in time -- 117 tankers en route to China:
There are only four (rational) reasons why Saudi Arabia would want to continue giving away their oil below cost, or very close to breakeven costs:
- maintain/protect market share (their stated reason for the surge);
- get all that on-shore oil out of harm's way and in friendly waters;
- continue to put pressure on US shale with ultimate goal to cripple US shale; and,
- shutting down production/shutting in wells in old fields risks losing wells, and possibly the fields themselves;
But this is a huge double whammy for Saudi Arabia. Think about it. If they had enough on-shore storage that was well-protected, they could be storing it there, either free, or at much lower costs. Instead,
- they are paying exorbitant floating day-rate fees (or they've bought the tankers earlier and now own them); and,
- selling their oil in the mid-$20 range at best.
On another note, this came in as a comment the other day. I don't want to lose that comment, so here it is again. It has to do with EIA's US crude oil supply in days, which the EIA now estimates to be 42. days. A writer who follows this much more closely than I do, and who understands it much more closely that I do wrote:
I figure there was an 18,160,000 barrels per day global surplus in April ....times 30 days would mean 544,800,000 more barrels were produced than used, and hence had to be stored somewhere
With global demand revised down to 81.30 million barrels per day, that means "we" have added 6.7 days to global supplies in just one month
