US days of supply of crude oil, link here: has increased from 28.3 to 28.9, week over week:
This is a complicated algorithm, based on at least four factors:
- amount of crude oil in storage;
- predicting the rate of increase/decrease in demand for refined products;
- predicting future operating capacity in US refineries;
- weather, as if affects:
- macro-economy: includes global demand going forward
- micro-economy, e.g., hurricanes in the Gulf
If the Friday night cheerleading video doesn't go viral, I will be very, very disappointed:
I do not think that the oil stock amount as good as you imply since there are released that are propping up the commercial oil stocks.
ReplyDeletehttps://www.energy.gov/articles/doe-announces-contract-awards-crude-oil-sales-strategic-petroleum-reserve
I believe that this 20 million barrel release is to be completed by December 15th
These are snapshots in time. Today, or better said, at the time of the most recent data released, there was more than enough oil, certainly no shortage.
DeleteFor me, 21 days of supply is the upper limit of more-than-adequate supply -- historically, 21 days is about what the US relies on. That's three weeks. We are now at 28 days+ -- slightly more than a week ago -- and trending up over the last month -- that's four weeks of supply.
If we drop below 20 days of supply, I'll raise the "yellow flag" and if we drop to 14 days of supply, I'll raise the "red flag." But with all things being equal, 28 days of supply suggests there is more than enough oil for the next month.
Again, just a snapshot in time.
I'm looking at the longer term SPR inventory. January 2000 about 635 million bbls. During the Covid glut when space in SPR storage space was leased was up to 656 million barrels during July 2000. January 2021 638 million barrels. Last week's report, 612 million barrels. Point I'm making is total inventory is down this year by north of 20 million barrels, for the reason of lowering fuel prices. SPR was meant for nation emergency, not for political reasons.
ReplyDeleteAgree completely. I've often said that folks come to different conclusions with same data because they have different time lines going forward.
DeleteI'm sort of like Jim Cramer in that regard: he often seems to talk out of both sides of his mouth but that's because he sometimes talks as a day trader and other times talks like a long-term investor and doesn't tell you which hat he is wearing.
Likewise, I flip-flop throughout the day: short-term, vs medium term, vs long term and I seldom point out the time line.
But it sure is fascinating.