Full tanks and tankers: a stubborn oil glut despite OPEC cuts

Well despite the years of claims that oil is running out, it seems that there is actually just too much oil flowing in the world. OPEC and Russia will continue to cut production for another nine months. The low prices have really continued to help the US shale oil market boom though, which contributes to the oversupply. Storage tanks in various global oil ports continue to top up and are drawing down at a very gradual snails pace. I read an analysis that says gold and silver price gains and drops mirror oil, so those commodities will probably hold as well. I suppose there is also the theory that governments are building stockpiles for a more widespread confrontation in our ongoing Global war. Whatever the case, everyone thinks there is just too much oil flowing right now!

Reuters
fter the first OPEC oil production cut in eight years took effect in January, oil traders from Houston to Singapore started emptying millions of barrels of crude from storage tanks.

Investors hailed the drawdowns as the beginning of the end of a two-year supply glut - raising hopes for steadily rising per-barrel prices.

It hasn't worked out that way.

Now, many of those same storage tanks are filling back up or draining more slowly than investors and oil firms had expected, according to global inventory estimates and more than a dozen oil traders and shipping sources who told Reuters about storage in facilities that do not make their oil volumes public.
With U.S. shale oil production surging, inventories remain stubbornly high and prices appear stuck in the low-$50s per-barrel range.

The market has not strengthened enough to drain many major storage facilities around the globe - which OPEC oil ministers had hoped would be a first step toward rebalancing what has been a buyer's market since late 2014.

Estimated inventories in industrialized nations totaled 3.025 billion barrels at the end of March - about 300 million barrels above the five-year average, according to the International Energy Agency’s latest monthly report.

Preliminary April data indicated stocks would rise further, the IEA said. Crude stocks stood at a record 1.235 billion barrels.

OPEC and other non-OPEC nations - most notably Russia - are now widely expected to extend production cuts for another nine months, through March 2018.

Well on a positive note, this should help to keep gas prices stable since refiners will continue to have access to the lower priced oil.

IIRC didn't OPEC cut back to prop up their economy? While stable oil prices are good, it's still way too high based on supply. Just saying'

a reply to: worldstarcountry

This is a good site for articles on oil prices: oilprice.com...

a reply to: worldstarcountry

Whatever the case, everyone thinks there is just too much oil flowing right now!

Then I am a contrarian because I say drill baby drill.

I like cheap gas and a vibrant economy.

a reply to: dfnj2015
Thats a very good source actually, thanks!
I just found this gem in there
U.S. Shale Just Won’t Die: Bankrupt Drillers Rise Again

Just like the surviving E&P companies that proved they are much more resilient than many -- including OPEC -- had expected, many firms that filed for court-approved debt reorganization are now emerging from bankruptcy, looking to grow.

According to law firm Haynes and Boone, since the beginning of 2015, a total of 123 North American oil and gas producers filed for bankruptcy, including Chapter 7, Chapter 11, Chapter 15, and Canadian cases. Those bankruptcy filings involve around US$79.9 billion in cumulative secured and unsecured debt, Haynes and Boone says.

According to the Financial Times, 8 out of the 10 largest U.S. exploration and production companies that had filed for Chapter 11 have come out on the other side bankruptcy and are still doing business.

Wonderful news for job growth too!
a reply to: Metallicus
I agree that we should maintain momentum on increasing domestic production. As you can see from the article above, shale oil companies are proving more resistant to OPEC's surprise. Myself, being Floridian, am one of the few on the bandwagon that we should open up our shores to tapping oil reserves off our Gulf Coast. It would be a wonderful job creator, and help Florida be a bit more energy independent. I feel at least opening one refinery in the state to handle that domestic oil production would also do a lot to ease gas prices here as well.

Nothing provides jobs the way energy production does! Drill baby drill indeed!

a reply to: worldstarcountry

Too much oil? Well, the price should go up.

Nothing seems to drop oil prices. The game is rigged. Up is the only direction prices seem to go.

I think we are watching the death throes of the oil industry. Natural gas will stick around but everything else is going electric. The only reason I can logically come to is that by then we will have nuclear fusion up and going.

Look, there it is again, "2030"!

Quartz.com - India, one of the world’s top gas guzzlers, plans to make all its cars electric by 2030.

Futurism.com - Mini Reactors Could Make Affordable Fusion Power a Reality by 2030.

And to top it off Argentina has a massive oil shale deposit that's getting started and will add to the glut. By the time they finally clear it out some clever chemical engineers may actually find a way to make a game changing new battery for cars and that will make the current oil infrastructure unsustainable. My best,

Oil consumption is declining. More fuel efficient vehicles, switch to solar, wind and other renewables, mild winters. Ongoing fracking is also producing oil and gas. Low oil prices are supressing oil exploration, so there is less demand to ship large vessels around the world. Workers are looking to live within a reasonable commute distance to work by public transport and not travel for miles.