Wednesday, January 26, 2011

Oil Imports SURGE

"When young professionals and the socially hip raise chickens in their backyards, newspapers do articles with slideshows. When us Mexicans do it? People call code enforcement."  Gustavo Arellano, who writes the "Ask A Mexican" column for the Orange County Weekly

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Oil imports over the past 4 weeks are surging when compared to the same period last year, increasing about 5% YOY.  Domestic production is up decently over the last 3 years.  We have very, very cheap money.

The stock market loves it, especially the energy sector.

So why are Oil prices so still high? (Front month might be down to $86+ but December 2011 futures are $94+).  I don't know... what I DO KNOW (or what I claim I know) is that the U.S. is clearly no longer the price determinant market place for Oil.  Further.... NOTHING moves in a straight lines. Even if Oil exports are in permanent decline, that does not mean that the balance of Oil imports to the importers will decline in an orderly fashion.

Oil is in a bull market (but not correction proof!!), and is likely to stay that way until it chokes off the economies of the importers.


19 comments:

Anonymous said...

Things look a lot like 2007/2008. Commodities are up, Oil is up, Stocks are up. If oil is dropping and imports to the US are up, I'd suspect that China or India or both are having trouble. Food tops oil on the priority list of what to buy, and both countries have bad problems with inflation in the price of food right now. Perhaps we are getting another reprieve.

Regards,

Coal Guy

Anonymous said...

Greg,

I'm not seeing the jump. When I look at the 4 week averages for this year and last for net imports this year is 9107000, last year is 9304000 barrels per day. Which number are you looking at? The current week is up 5% over last year, but that may be noise.

Regards,

Coal Guy

Greg T. Jeffers said...

http://ir.eia.gov/wpsr/wpsrsummary.pdf

actually much more than 5%

Greg T. Jeffers said...

Given the price/inventory my best explanation is some form of hoarding somewhere else, i.e. China's SPR...

Anonymous said...

Greg,

These guys can't get it straight to save their lives...

One report says up, the other down.

Check http://ir.eia.gov/wpsr/overview.pdf

Check line 33 Net Imports of Crude and Petroleum products. About halfway over are the 4 week averages for 1/21/11 and 1/20/10. WTF!!!

Regards,

Coal Guy

Dextred1 said...

New debt number out from CBO, 1.48 trillion dollars for this coming yr.(Just Six months ago it was suppose to be 1.1 trillion, hahahah) Jeffers you are right, there are no macro solutions. I think things are starting to get bumpy. Might be a good yr to start storing heirloom seeds, buying the farm you wanted, a tractor for plowing and other assorted tools you might need. I think it is becoming readily apparent that we are the next major world empire to go cu-put. I don’t think we will be as fortunate as Japan has been because we don’t have large markets to export to and thus don’t run a trade surplus. We are the wheel that sets this whole thing in motion and the tie rod end is screeching and the car is wobbling down the road. The demographic boom is here and the fools cut SS taxes, leaving us with a huge funding mess, why would you not cut payouts in SS the same amount. This will be the first full yr in history that we will not have a surplus revenue in SS. Expect Greece style cuts within a yr or 2, maybe less. I just have this weird feeling that they have to know what they are doing. The more I look at it, the more I think it must be a plan.

Jeffers a question,

Are GDP numbers fake, I ask this because how else could we explain less revenue and miss by 400 billion? Some 150 billion is from SS change but what about other 250 billion. If we had real growth would it not show up in tax receipts.

Anonymous said...

Oh, I see. Those numbers are for crude. It looks like the US has ramped up refinery capacity and is exporting more refined products, making the net drop a bit.

Regards,

Coal Guy.

Anonymous said...

Greg,

Any explanation why Brent is so expensive? Is there some supply disruption to Europe?

Regards,

Coal Guy

Anonymous said...

It seems to me that net imports is the number to watch. Crude that gets refined here but leaved on another tanker should not count.

Regards,

Coal Guy

Anonymous said...

Dex,

Every dollar that the government spends is tacked onto the GDP, no matter how foolishly it is spent. The more they spend the bigger the GDP no matter that nothing of value was produced. Makes you wonder why they call it Gross Domestic PRODUCT.

Regards,

Coal Guy

Dextred1 said...

Coal guy,

I does make you wonder. One day we will pay for all of this fraud. I don't understand why anyone would invest in Tbills?

Dextred1 said...

You know what I love about the inflation number is how the hide it. Box is smaller with less in it, but price stays the same. HOKUS POKUS no inflation, good thing to!!!!! I was beginning to think we had none!!!!

bureaucrat said...

People invest in Treasuries (and have been for the last few years) because they know that if the rest of the world is going crazy, you can still depend on somethings, and one of these is the awful, bankrupt, dysfunctional United States government (which I work for).

Every rich person knows that when your country is busy destroying itself and coming after you, you run to United States debt, which will bail out your azz. And with our obscenely low tax rates (for a socialist country), why wouldn't they flee here with their money?

bureaucrat said...

Nice to see you saw, Jeffers, the EIA chart on oil imports today. Also nice to see you have had a small change of viewpoint. The oil that is supposed to be disappearing from oil export states seems to be roaring into the U.S.

Looks like WesternTexas has some 'splaining to do. :) Both for the price vs gold thing and the oil exports still flying ahead from these "depleting" countries.

bureaucrat said...

Jim Rogers (made a billion in commodities in the 1970s) came to talk to a small group of us in Chicago last week, and I asked him about this substantial difference between the Brent crude price ($96 a barrel tday) and West Texas crude price ($86 a barrel tday), since Rogers has his own commodity index. He didn't have anything real specific to say about that -- he even was a little surprised himself by the spread between the two. He just said that if I were a trader I could make lots of money trading between them. :)

Anonymous said...

Dex,

If you use dollars, nothing else matters if T-Bills go bad. They are the safest of any dollar based investment.

Regards,

Coal Guy

westexas said...

As Coal Guy noted, the four week running average of NET oil imports is down from January, 2010. Here is the four week running average chart of US net oil imports:

http://www.eia.gov/dnav/pet/hist_chart/WTTNTUS24.jpg

But of course, our key argument is the global net export supply versus the rapid increase in Chindia's net imports, and a reasonable projection is that the the supply of Available Net Exports (global net oil exports less Chindia's net oil imports) is in the process of falling from 41 mbpd in 2005 to about 27 mbpd in 2015.

westexas said...

Here is the data table for the four week running average of US net oil imports:

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=wttntus2&f=4

The data table shows net imports (four week running average) of 9.1 mbpd for the most recent week, versus 9.3 mbpd a year ago and 11.8 mbpd in January, 2005. The January, 2005 to January, 2011 data show a net import decline rate of about 4.3%/year.

Here is an interesting coincidence: If we extrapolate the rate of change in the 2005 to 2009 US consumption to production ratio, and if we extrapolate the 2005 to 2009 rate of increase in Chindia's combined net imports, as a percentage of global net exports, the US would cease (net) importing oil around 2023, while Chindia would be consuming 100% of global net exports around 2025.

westexas said...

"Looks like WesternTexas has some 'splaining to do."

See above explanations for the multiyear decline in US net oil imports.