You realize oil trading up based on American Petroleum Institute (API) Inventory Number alone in the absence of US Import/Export Data and Data from the rest of the World is Nonsensicle


First, one has to be skeptical of the source itself as demonstrated by last weeks API number that was way off.  API is little difference than OPEC. API represents US producers whereas OPEC represents member producers. Both have the same agenda, get prices up.  The only difference is OPEC members wear thaubs or tunics and API members wear suits and ties.

Even trading on EIA inventory number alone is absurd.  US production and more important US increased crude and product exports delta (increase) that needs to be accounted for.  All else being equal the US is taking huge market share from OPEC+. All the sizable US production and exports are the difference.  Every additional bbl from US is one less from OPEC+ .

API heralds US inventory only up 13.8 million bbls this year.  Net the total INCREMENTAL crude and product exports from US since January 1 and you will understand the true supply situation.

For example lets look at the new 670K bbl day Cactus II pipeline coming online.  In real world it will take months to ramp volume. But for arguments sake lets assume next week its online and shipping 500k bbls/day.  Now the Permian bottle neck has millions of inventory in storage in the Permian , correct.  So next week Cactus II ships 500K X 7 days = 3.5 mm bbls incremental from Permian to Trafigura/Buckeye and MODA terminals for EXPORT.  US Inventory drops 3.5 mm bbls for the week !  Brent and WTI go up $2.00. BUT thats 3.5 mm bbls less OPEC+ sells.

What are US Investment Bank Oil Analyst modeling ? Analyst want the Saudi and UAE banking business and will facilitate OPEC agenda.

Traders have no access to transparent data. They're like Pavlov's dog. They react to an isolated data point like rig count (rigs have been worthless data for years) or US inventory (as calculated by API).

Too Much Supply.

The only reasonably close inventory number is Orbital Insight Corp satellite survey.  It showed May year to date inventory number up 143 million bbls for the year. 

In 2020 "the chickens will come home to roost".  There will be "real" competition, the first time in decades. OPEC is trying to lock Asian buyers into long term contracts or sign Petrochemical and Refining JVs.  

Transparency in oil markets starting.  Japan, Korea, China and India are buying US oil.  India recently bought a tanker of Exxon's GOM Thunder Horse mid api oil for the first time.  India and China talked about starting a joint buying group.  

Oil will become a "BUYERS MARKET".

Oil will start to trade like a commodity !

Which I think it is ?



Edited by Falcon
  • Upvote 1

Share this post

Link to post
Share on other sites
Sign in to follow this  
Followers 0