Sunday, June 20, 2021

The Discussion Changed In Less Than One Month -- No Longer Supply Decline, But Rather Demand Surge -- June 20, 2021

An analyst much smarter than I nailed it: just because there is a growing supply of crude oil, it doesn't mean there won't be a shortage. It's all about demand and the "ability" of operators to keep up with that demand. 

It now appears that the US won't hit Biden's ridiculously low bar to have 70% of American immunized by July 4, 2021. Already, the president has pivoted: he now talks about the 150 million doses that have been administered. But that still leaves about 50% of Americans not fully vaccinated. Evenly split. 

But even with that, the US is re-opening very, very quickly. 

The rest of the world: it's estimated that about 3% of the rest of the world is fully vaccinated. Ouch. And I'm not talking about the literal jab. 

Some stories from overnight about the demand surge:

  • from Bloomberg, empty oil tanks at key storage hub show speedy demand rebound; note the emphasis on demand, not supply;
  • also from Bloomberg, Big Oil's new problem isn't lack of demand, it's lack of supply; yes, a different emphasis, but it still stems from the demand surge; either that or everyone is lying about OPEC's spare capacity;
  • from S&P Global Platts: South Korea's crude oil imports from the US rise for the first time in 12 months in May, 2021
    • refiners buying a minimum of four VLCCs/month of US crude in 2021
    • light US grades ideal for raising middle distillate output yield (the Bakken is the lightest oil out there)
    • widening Brent-Dubai spread favors Middle Eastern, US crude purchases;the world's fifth-largest crude importer received 1.227 million mt, or 8.99 million barrels, of US oil in May, up from 7.41 million barrels a year earlier, the customs data showed. The country has been receiving more than 4 VLCCs/month from the US since February.
    • so, what's the vaccination status in South Korea? 25% of the country's population has gotten at least one jab (AstraZeneca; Pfizer; or Janssen
  • so much more at the Platts link

By the way, did anyone see the paradox in the Bloomberg article regarding empty storage tanks at Cushing and why that is occurring?


  1. IMHO with the depressed worldwide rig count for the past year, there is not as much crude available when considering depletion of existing wells.

    USA is now an importer of crude due to production of crude down over 2 million barrels a day.