http://www.americanjournalreview.com/something-strange-taking-place-off-coast-galveston-tx/


Something Very Strange is Taking Place Off the Coast of Galveston, TX

June 25, 2016 AJ Review General News 0

Having exposed the world yesterday to the 2-mile long line of tankers-full’o’crude heading from Iraq to the US, several weeks after reporting that China has run out of oil storage space we can now confirm that the global crude “in transit” glut is becoming gargantuan and is starting to have adverse consequences on the price of oil.

While the crude oil tanker backlog in Houston reaches an almost unprecedented 39 (with combined capacity of 28.4 million barrels), as The FT reports that from China to the Gulf of Mexico, the growing flotilla of stationary supertankers is evidence that the oil price crash may still have further to run, as more than 100m barrels of crude oil and heavy fuels are being held on ships at sea (as the year-long supply glut fills up available storage on land). The storage problems are so severe in fact, that traders asking ships to go slow, and that is where we see something very strange occurring off the coast near Galveston, TX.

FT reports that “the amount of oil at sea is at least double the levels of earlier this year and is equivalent to more than a day of global oil supply. The numbers of vessels has been compiled by the Financial Times from satellite tracking data and industry sources.”

The storage glut is unprecedented:

Off Indonesia, Malaysia and Singapore, Asia’s main oil hub, around 35m barrels of crude and shipping fuel are being stored on 14 VLCCs.

“A lot of the storage off Singapore is fuel oil as the contango is stronger,” said Petromatrix analyst Olivier Jakob. Fuel oil is mainly used in shipping and power generation.

Off China, which is on course to overtake the US as the world’s largest crude importer, five heavily laden VLCCs — each capable of carrying more than 2m barrels of oil — are parked near the ports of Qingdao, Dalian and Tianjin.

In Europe, a number of smaller tankers are facing short-term delays at Rotterdam and in the North Sea, where output is near a two-year high. In the Mediterranean a VLCC has been parked off Malta since September.

On the US Gulf Coast, tankers carrying around 20m barrels of oil are waiting to unload, Reuters reported. Crude inventories on the US Gulf Coast are at record levels.

A further 8m barrels of oil are being held off the UAE, while Iran — awaiting the end of sanctions to ramp up exports — has almost 40m barrels of fuel on its fleet of supertankers near the Strait of Hormuz. Much of this is believed to be condensate, a type of ultralight oil.

And unlike the last oil price collapse during the financial crisis only half of the oil held on the water has been put there specifically by traders looking to cash in by storing the fuel until prices recover. Instead, sky-high supertanker rates have prevented them from putting more oil into so-called floating storage, shutting off one of the safety valves that could prevent oil prices from falling further.
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A widening oil market structure known as contango — where future prices are higher than spot prices — could make floating storage possible.

The difference between Brent for delivery in six months’ time and now rose to $4.50 last week, up from $1.50 in May. Traders estimate it may need to reach $6 to make sea storage viable.

JBC Energy, a consultancy, said in many regions onshore oil storage is approaching capacity, arguing oil prices may have to fall to allow more to be stored profitably at sea.

“Onshore storage is not quite full but it is at historically high levels globally,” said David Wech, managing director of JBC Energy.

“As we move closer to capacity that is creating more infrastructure hiccups and delays in the oil market, leading to more oil being backed out on to the water.”

Patrick Rodgers, the chief executive of Euronav, one of the world’s biggest listed tanker companies, said oil glut was so severe traders were asking ships to go slow to help them manage storage levels.

“We are being kept at relatively low speeds. The owners of the oil are not in a hurry to get their cargoes. They are managing their storage capacity by keeping ships at a certain speed.”

As a result of all this, something very unusual going on off the coast of Galveston, where more than 39 crude tankers w/ combined cargo capacity of 28.4 million bbls wait near Galveston (Galveston is area where tankers can anchor before taking cargoes to refineries at Houston and other nearby plants), vessel tracking data compiled by Bloomberg show, which compares w/ 30 vessels, 21 million bbls of capacity in May. Vessels wait avg of 5 days, compared w/ 3 days May.
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As AP puts it, “a traffic jam of oil tankers is the latest sign of an unyielding global supply glut.”

More than 50 commercial vessels were anchored outside ports in the Houston area at the end of last week, of which 41 were tankers, according to Houston Pilots, an organization that assists in navigation of larger vessels. Normally, there are 30 to 40 vessels, of which two-thirds are tankers, according to the group.

Although the channel has been shut intermittently in recent weeks because of fog or flooding, oil traders pointed to everything from capacity constraints to a lack of buyers.

“It appears that the glut of supply in the global market is only getting worse,” said Matt Smith, director of commodity research at ClipperData. Several traders said some ships might have arrived without a buyer, which can be hard to find as ample supply and end-of-year taxes push refiners to draw down inventories.

And here, courtesy of MarineTraffic is the interactive snapshot (readers can recreate it here):

All of which explains why this is happening:

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uh oh , could this precipitate a "gas bubble" ?

I experienced a gas bubble under the covers last night...

ugh things were just starting to look up

I ain't gonna bitch cheap gas. It's not gonna stay that way forever.

It reminds me of the great oil shortage of the 70's, where all storage facilities were at capacity.

When America sneezes Europe catches a cold.

Times are changing though.

We're soon going to find out what happens when China's economy cools off. I hope it only means cheap products.

Or the late 80s to early 90s when gas was .86 a .97 cents/gallon and the economy was frickin' gangbusters. Low gas prices are not always a bad omen.

I can remember buying gas for my first pickup for .49 cents a gallon, in 1975, and then when the price doubled to .99 cents a gallon a couple of years later

Oil prices low = bad.
Oil prices high = bad.

Why the glut ? Are consumers using less oil ?

Time to get the CORN out of oil.

I remember pumping gas at 19.9c/gallon! There was glut then also.

I'm sure oil will make a spectacular rebound when people least expect it. Otherwise, if you think you know when it's going to come back, place your bets and get rich.

I wish I had some tanks to store it in at the farm.

kwg

I would like to see Saudis drink a quart of crude a meal.

Diesel does seem like a bargain compared to most other things.



Wheat and beef are also going down hard.



The never ending cycle.


(save for a rainy day)

of course there is an oil glut..... i bought stock in oil producer.
if you guy's want to get rich just ask me what i investing in and go the other way.

China cooled off 18 months ago and is getting colder

There is an oil glut because of two things:

1) The world realized that there truly is an oil glut. There is oil seemingly everywhere. It can be found and drilled with ease all over the globe. Only regulations are holding back the sense of an overwhelming supply of oil. This runs contrary to the fearmongering of the past 50 years based on the foolishness of "peak oil." That fear was priced into the market (and world events especially the Middle East) ever since WWII. That narrative is now dead, at least for a few centuries.

2) Countries dependent upon oil for their economy, influence, and social standing in the world have to flood the market with more and cheaper oil in an attempt to maintain some sense of their status and to continue generating revenues to which they have grown accustomed and to try to flood more expensive producers out of business (Venezuela, Russia, Saudi Arabia, OPEC, Middle Eastern wannabees). This is a losing proposition, a game of global energy chicken.


Cheap oil is here to stay, other than through political maneuvering. Those politics might be very volatile, but in the end are a losers game since oil is now know to be so plentiful. It's just a matter of getting it out of the ground when desired.

BINGO!

Cheap oil is here to stay. In history there are lessons. You will be wrong. No doubt. No clue when, but you will be wrong.

I remember the gas station price wars of the later 1960s when gas sold for $0.14/gallon. It was stable for many years at $0.26 to $0.32 per gallon.

This glut might have something to do with destroying ISIS. Oil is their only significant source of cash.


I'm all for using up the rest of the world's oil and saving ours. I realize it doesn't sit well with the oil companies and workers here, but it seems a good strategy on face value.

I am so happy to be out of it. If I were in I would be one handing out the pink slips and early retirements. I have done it before and and more than pleased to be an observer this go around.

Though now retired, I ain't selling my company provided Shell stock. It grosses me $2.5k a month on dividend alone with three more years ahead to receive the balance of what is due. Nope, I am sitting tight with that piece of my portfolio.

Interesting that many here always blamed high oil prices on the "speculators"...

Absolutely wrong.

They were using the corn to kill the older engines so people will buy new cars.

i would truly love that!

I have a close cousin like you , he makes an excellent barometer on what NOT to invest in. His personal bests were Enron and World Com........

Never happen in an election year. That corn is a giant tax subsidy to big agriculture!

Sycamore

Who is this "ours" you are talking about?

SH aside, I couldn't agree more.

Yep, the idea that gas will go to 1.00 a gallon and then stay there indefinitely sure shows that some folks don't wake up when they get up.

+1

I called my broker after seeing my energy stocks swirling in the drain. He talked me into buying more.

Too funny.

Inflation adjusted price of oil since the Civil War.

Ed, what sort of price targets are you hearing at year end?

Good news! good news! Good News!! Gas lower $180's here and still dropping ! Drop baby, drop!!

I can only imagine how stupid this last post was....

I know when oil drops down it puts good guys out of work. But, finally I get to jump ahead of oil related inflation and keep some money for myself. Bring regular down to $1.80 and we can stop there. That should be somewhat of a happy medium. Now, if we can just keep China from starting a war........

kwg

+2

I'd like to see it back to around a buck 20 or so per gallon like it was last winter.

They REALLLLLLLLLLLLLLLLLLLLY need to take that damn corn out, it's a stupid f*cking thing that only makes Iowa farmers and city hipsters happy.

Cheap gas? $2.25 here. I know our tax is higher than many states, and the local stations really like "sticky" prices, but cheap is $1 or less. Just checked spot price crude $45 and gasolene $1.38/gal. At that price we should be at a buck.

I tried to make it simple...

Burn foreign oil up and save domestic oil for when it becomes scarce. I know it's an over simplification with jobs at stake, and I don't want the Russians to thrive.

Just when things got boring around here, another price of oil thread.

Hey Radical troublemaker!

Oil is too low and gas is too high!

Yeah, those filthy white Christians...be much better to see the Muslim filth thrive.

For rost and Ed,

Please make constructive arguments as to why I am wrong in my analysis. I'd like to hear your actual comments.

But, I haven't been wrong on this for about the last five years, and I for one wish that oil was not dropping since it has so adversely affected my home state.

And of course the other problem is that we're all driving around in go-carts. I already have an eye on my next vehicle and it will be a V8, slurping gas so bad there'll be flames coming out it's a hole.

We have not been as dependent on foreign oil since the 70's.

I know ethanol is extremely unpopular with many people. But, producing ethanol has kept a solid floor on the price of corn for a number of years and that has helped the corn producers. It also keeps the science of alternative fuels alive. The by product of the ethanol is used for livestock feed so it's a multi use product.

Yes, I suppose it costs some folks their jobs in the oil patch but it makes jobs for the folks in the corn belt where we have little or no oil production.

kwg

Well said because, besides ruining engines and keeping liberals in office, that's all it does.

Brilliant

Ethanol sucks!

It's a schittty product, end of discussion.

Ahh yes, the corn belt.

Gotta keep those corn welfare farmers happy to thank them for Obama Care.

Charles Grassley is s big supporter of alternative fuels and energy sources like wind turbines as well as ethanol and bio diesel. It's what has to happen if you are in a non oil producing region. It's called survival.

kwg

Ethanol subsidies are ridiculous, as are 99% of any other subsidies. One side does it to push an agenda, the other side does it to buy votes.

You guys missed a point. That cornhole sludge has made a lot of small engine repairman very happy. and a lot of scrap iron business doing also. Cause if you use that crap and don't know better, you either going have to rebuild it or scrap it.......................

Based on simple history prices will rise again. No doubt about it.

Someone said recently, here I think, it would never see 50 a barrel again and it almost hit that some time back or did already.

Will it hit 200 a barrel? Eventually it will have to, if for no other reason, inflation.

Time line on that? Who knows, if I knew that I"d be retired already obviously.

I don't of many that want it high as hell or same with fuel prices but to keep it averaged out so it doesn't hit a huge part of the economy so badly.

Ed probably has a much better answer than I do, but oil will go up, oil will come down, oil will go up again.

A glut isn't a lifetime thing....

My father in law and a couple of cousins farmed/farm. The cousins do it on a LARGE scale.

They all made a profit before ethanol. They all made one after ethanol. They all would if ethanol went away.

There are not as many jobs tied to it, as there are to the oil industry.

Brent crude is at $46.71 right now.

Well, rost is correct. Anyone with any awareness at all of historical energy prices knows it has peaks and valleys, booms and busts. It's the nature of the beast.

Another thing wise folks will not do is predict anything to do with energy prices.

Yup, other than to say that they will change.

Bingo! it has been a huge boost to the small engine industry.

If the small engines companies would build an engine compatible with ethanol additive gas, that would show some faith in restoring their reputations.

We have had ethanol for years now, but every engine you see from chainsaws to motor boats isn't ethanol compatible.

Okay, I understand where you're coming from. In essence, I agree with your basic premises. I think that you are missing mine though.

I am not arguing about daily/monthly/yearly fluctuations due to small production ups/downs or even political manipulation. I am saying that the fundamental premise of oil (and other energy sources) being a limited commodity which has been the dominant worldview for the last 300 years is now known to be incorrect. Hence, we will see massive changes in the geo-political maneuvering that have centered around the control of energy production for the past couple centuries. "Cheap" energy is plentiful and easy to find/produce nowadays. It all revolves around the politics rather than the supply in the ground.

LOL

Sounds pretty deflationary.

If you had any clue as to what is involved in exploration and production of oil you would not make that statement. Yes, there is plenty of oil, but it is generally not easy or cheap to produce not to mention the political, legal and environmental hurdles that have to surmounted.

The glut of oil was due a combination of high crude prices, low interest rates and a desire of Wall street to find something to invest in with a decent rate of return. Hence of perfect storm of massive investments which created over production, and hence the huge drop in crude prices.

But oil production isn't as simple as sticking a pipe in the ground and oil magically flowing forever. Every field declines once it hits its peak production so new fields and expensive EOR work is required to keep flow rates up.

Funny how a place so heavy populated with anti welfare, anti redistribution folk, are so sad to see market forces benefit the majority, or, want government mandates and forced subsidies for an inefficient fuel.

Hello Rost
You are a big state with lots of oil. We are a little state with zero oil. Yes, there are tax breaks on ethanol. Are there still tax breaks for oil producers? The last I knew there were but that's been several years ago. I guess it's our turn for a few tax breaks on ethanol.

I started using ethanol products in the late 70's in a 1968 Buick. I have used it in every car since then with nothing more than replacing some gasoline filters. There was a time when the industry was using methanol and it did cause some problems with engines, hoses and filters. But, it's been 100% ethanol since the late 80's when the industry really took off.

I see no problems with eliminating the tax breaks for ethanol when every other industry eliminates their tax breaks as well. Which is probably why Congress won't ever do it. They all have their big money donors to pay back.

kwg

Spoken like a TRUE democrat.

Once again, a conservative Yankee is a LIBERAL. Truly amazing the amount of dumbphucktitutde on the 'Fire.

The only thing that will spike oil prices at this point is politics.

Not to mention keeping small engine mechanics in business, along with replacement carburetor builders. I quit trying to use my weedeater and just use roundup. I had to work on the carb every time I tried to use it, so I gave up. miles

I know nothing of tax breaks either way.

I do know in simplicity that my relatives made money before ethanol and after. Some after ethanol came along, have refused to switch to corn. One cousin farms around 5000 acres with his Dad, and they've never planted corn. Another farms well over 10,000 and has always had corn. They've both told me they don't get wound up in short term stuff, just keep grinding away.

As to using ethanol, it started around 2008 here, with a 2005 bought new motor, first tank I ran into was 2008 appx, started having issues right after that. Such that like Miles, I had to clean the carb EVERY time we tried to use it. Read at 5am to fish. Then at 10am to fish again... ridiculous. When I finally realized it was ethanol, it cost me almost 200 bucks in parts on the boat motor to get rid of all the parts it had affected, thats with my labor.

In our fire department it went from totally reliable chain saws and such, to now you have to change fuel out every 3-6 months in pumps and saws and start and run them all the time, not to mention replacing hose lines, filters, etc... and put additive in the fuels to hopefully get the 3-6 months fuel life. Sure does suck wasting fuel every X months just because its not reliable in a life or death situation.

In fact in the pumps that run our jaws of life, ya know, the tools that cut you out of a car to save your life before you die... we can no longer run ethanol based fuels, we buy specific expensive non ethanol as we prefer to save all lives, regardless. Ethanol can let you die really quickly...

I have not had any issues with it in road vehicles that I"m aware of but its been hell on small engines all over, and living rural on a farm, we have likely more small engines around than the average joe thats got a yard to take care of and thats about it.

Ethanol is a waste of a food product when we have oil enough as is. All it does is cause the cost of both fuel and food to go up. Makes a lot of sense I guess for liberals probably. Greenies never do figure out real life best I can tell.

YMMV

That pretty much sums it up. Liberals don't have to figure out life...the government does it for them.

On a little side note, often marine filling stations and marinas sell ethanol-free gas. I take an extra can with me when I'm near one so I can fill it up for all of my small engines.

I would too, if I had such. For dang sure.

I"ve been tempted to spend the extra and go fill jugs at the airport too... but never got that far because its more miles out of hte way for me.

We have several around here. People who depend on boats can't afford the problems that ethanol creates.

This website has a list of stations selling ethanol free gas.

Click on your state, then find the station nearest you..

http://www.pure-gas.org/index.jsp?stateprov=TX

The biggest problem occurs when you mix ethanol with ethanol free fuels. The additives conflict and gel. Pain in the ass.

Does premium gas have ethanol in it?

Yes, unless it says otherwise. Ethanol dissolves fuel lines and resins, especially those in fiberglass. It also attracts water and separates in a relatively short amount of time. It also causes more combustion for the amount of energy produced, reducing gas mileage.

Thanks

It's got ethanol in it.

But, after having to pay a large bill for rebuilding the fuel system in my Honda Rancher, the guys there told me to use premium in it. Plus, I treat the gas with Stabil and Stabil Ethanol Treatment.

Run everything regularly.

It seems that the most damage occurs when you let something sit and the gas evaporates from the fuel system. The damaging decay happens then... (After the gas has evaporated and oxidation sets in.)

Useful, thanks...

That's the short term problems for sure. Ethanol is also responsible for shorter engine life because of it is a very strong "cleaner". Today's motors will last much longer without it. I guess that's good for the car companies.

Got two pickups and two tractors that run on diesel.

I wish everything else did.

Nice! It lists both stations I use, so it seems pretty accurate.

I got into an online discussion with a liberal ethanol lover on Bangshift.com who believes (like a religion) that ethanol produces more power and provides better MPG than gasoline. When I pointed out that it takes more ethanol to produce as much power as gasoline because a gallon of ethanol produces less energy (heat) than a gallon of gasoline he informed me that heat has nothing to do with energy. When I pointed out that heat has everything to do with power production he let me know how stupid I was stopped responding. A friend of mine has a Lamborgini built by Undergraound Racing that makes about 1200hp on pump gas, about 1500hp on racing gas and over 2000hp on pure ethanol (E100). When he changes fuels he programs the engine control computer for the fuel he is running and the computer adjusts the turbo boost and the amount of fuel to match the fuel. You can run much higher boost with ethanol because it is has a real high octane rating (less explosive). Thanks to the all the free government money given to ethanol producers and E100 is about 1/10 the cost of racing gas. I'm considering running some E85 in my old high compression '68 El Camino but I'd have to up the compression to about 14:1 to make the same more power that it makes on 91 octane gas and the MPG would really suck.

Looked at a link like that some years ago, said a local station aobut 15 miles away had it. Drove over. Yep, it was sold in quart cans for the lawnmowers...

Just an FYI.

I know this thread wasn't about ethanol to begin with but my post about ethanol sort of fits because the guy that owns the Lamborgini is/was in the oil drilling business. He hasn't drilled a well in over 2 years but made a ton of money when he was drilling. He bought a whole shop full of hot rods (10) and now has plenty of time to enjoy them.

On the highway I get 4-5 more miles per gallon with non-ethanol. It's all I use for the ATV/mower/generator/weedeater etc etc.

So more ethanol means LESS miles per gallon, which means MORE stops at the pump which means more TAXES collect.

At least Iowa farmers are happy.

Exactly right which is why we all have to drive around in one of these.

Oranges are dumped by the ton to keep the price high....diamonds are mined and controlled to keep the price high.

There has always been plenty of oil.

There's a bit more to getting oil out of the ground than a pickup truck full of illegals picking oranges off a tree...

... but I wouldn't expect someone who drives slow in the fast lane to grasp such a concept.

well, this was interesting....

http://www.foxbusiness.com/markets/2016/07/20/halliburton-says-oil-market-has-turned-corner.html

In the past 3 days, we've had a minor boom in demand for energy related parts

The majors have reduced capital expenditure significantly. My company, Royal Dutch Shell, has shut down a number of large projects, some with billions spent in engineering, procurement and construction. China and India will grow, second and third world countries will develop. Demand will rise and there will be gap in the necessary oil development to provide the needed supply. The price of oil will rise. At least that's my two bits.

First, I probably know a good bit about getting oil out of the ground and getting it to market.

Second, I agree that "there is plenty of oil."

"Plenty of oil" means zero. The ultimate cost of oil, and gas by the way, is a geopolitical process first and foremost as it drives the risk considerations we use to decide to move forward.

I could not agree more......the cycle continues, and will continue to do so.