Oil has been in Contango since 2014 with 17% over production to consumption. Massive — millions of barrels — are sitting in oil tankers and barges around the world without buyers.
Simple example: June 13, 2017
Across the world, the plight of the Saiq, now idling off the coast of Mauritania, reflects a broader trend in the physical oil market. After six months of oil-production cuts from the Organization of Petroleum Exporting Countries and 11 non-OPEC nations led by Russia, crude supply is surprisingly still plentiful, according to traders.
“It’s a buyer’s market,” said Olivier Jakob, managing director of Swiss-based consultant Petromatrix GmbH, echoing a widely held view in the physical market.
On paper, global supply and demand balances from the likes of the International Energy Agency say the market should be reducing stockpiles. Oil prices, however, suggest that any inventory reduction remains minimal. The headline price for Brent crude, the global benchmark, is below $50 a barrel, indicating buyers are on the sidelines.
Time spreads, the price difference between contracts for different months, have widened considerably in June, with key measures at levels last seen in November, when OPEC announced its output cuts. Signs have emerged that traders are resorting to turning tankers into floating storage due to a lack of buyers.
Atlantic Glut
The oversupply is particularly acute in the so-called Atlantic basin, where high quality light, sweet crude is abundant due to a combination of factors. They include the return of some Nigerian production, stronger output from Libya, robust North Sea supplies and record-high U.S. oil exports.
www.workboat.com/...
We can not let the oil speculators and fear mongering of the Harvey Storm, no matter its horrible local affect, cause a false speculative hike in fuel costs. Our country is in a precarious position economically to have a non-event of an oil glut globally effect prices to Americans in need.
The instant issue caused by Hurricane Harvey is of some concern. the truth is it’s a blip with oil storage in tankers and barges sitting in the oceans around the world. We have a GLUT of oil since 2014. Why, thanks to solar and natural gas being cheaper/cleaner than oil.
This IS NOT FAKE NEWS MR. PRESIDENT.
ref: Contango: Contango occurs when the current futures price of an asset (as quoted in the futures market) is higher than the current spot price of the underlying asset. (meaning today’s prices are much less due to excess supply)
9 March 2017
"Floating storage off Singapore reached an all-time high in February," Smith told CNBC's "The Rundown."
"We started to see Singapore floating storage dropping off last month from that record high of 60-million barrels, but we saw it rebound last week."
Ahead of the OPEC production cut, producers ramped up production and exports to maximize revenues, with OPEC sending over three- fifths of its production to markets in the Asian region.
February arrivals hit 16.1 million barrels per day. That's 1.1 million barrels more than last year's average and nearly 300,000 barrels higher than the previous record set in February 2016, according to ClipperData.
The region's refineries cannot process that much crude, so the influx lifted Singapore floating storage to 64-million barrels in early February, the highest level on available records. It has fluctuated since then, but remains well above recent averages.
"As long as we see 60-million barrels floating offshore in Singapore, it is just indicating that the market is still oversupplied and is not absorbing all this oil," Smith said.
www.cnbc.com/...