Cory's Insights – Thu 25 Feb, 2016

Stats on the amount of excess oil in storage

We all know oil has been in an over supply environment for the last two years. We also know that the excess oil gets stockpiled hopefully to be used up shortly thereafter. Unfortunately the stockpiles have only been growing and the recent stats show how bad it has gotten. Here are some numbers from the U.S. Energy Information Administration unless otherwise noted.

  • U.S. crude inventory rose by 3.5 million barrels last week,
  • Gasoline stocks showed a surprise decline of 2.2 million barrels, indicating stronger demand,
  • Total domestic crude inventories equal 507.6 million barrels (weekly data)
    • In monthly data, which doesn’t line up exactly with weekly data, inventories last exceeded 500 million barrels in 1930
  • Global stockpiles are also screaming higher. According to Bank of America Merrill Lynch, global petroleum stocks have increased by 800 million barrels since the beginning of 2014.

Overall this domestic and global oversupply will take some time to work through. Even if we see significant production cuts from the US and OPEC with over 1 billion barrels sitting in inventories around the world price will not be able to run the way it did back in 2007.