Out in the real world, oil market is much better than it looks
http://www.worldoil.com/news/2015/8/25/ ... n-it-looks
Supply / Demand will be much tighter in a few months.
Oil Supply / Demand
Oil Supply / Demand
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Supply / Demand
Numbers in the EIA reports just don't add up. For over a year EIA has been saying that global oil supply exceeds demand by 1.5 to 2.0 million barrels per day. On the low end that means we should see global oil inventories up more than 800 million barrels, BUT THAT AIN'T THE CASE.
SO WHERE IS THE "MISSING OIL"? I GOT THE NOTE BELOW FROM AN EPG MEMBER WHO IS A VERY SMART OIL MARKET ANALYST:
There are ”missing barrels” in the IEA’s calculation of global crude oil supply and demand. on the supply side and the demand side.
On the supply side, the amount of the over-supply in the crude oil markets since about 1/1/2015 being reported by EIA is larger than worldwide demand plus the increase of oil in OECD storage. The bears, notably Goldman Sachs, say those barrels are in non-OECD storage and in tankers at sea (neither of which is tracked by the EIA or the IEA).
The IEA is accounting for this difference by reporting a large “miscellaneous to balance” (MTB) figure or a plug in order to balance the equation: Worldwide Supply = (Worldwide Demand + Increase in OECD Inventories + Miscellaneous to Balance). The MTB plug is essentially "missing barrels" that should be filling up worldwide inventories, but are not accounted for in the IEA data. The bulls say in previous downturns, demand figures have been subsequently revised higher as MTB figures are revised lower. This suggests that demand is being under-estimated and the crude oil over-supply is not as large as summary IEA figures suggest.
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This is EXACTLY the same thing that happened in 2009. When EIA and IEA finally reconciled to actual supply & demand they found that demand (thanks to lower fuel prices) had been much higher than their forecasts. IT IS VERY IMPORTANT THAT ALL OF YOU KNOW THAT WHAT EIA REPORTS AS "ACTUALS" EACH WEEK ARE REALLY FORECASTS. THEIR NUMBERS ARE ALL BASED ON FORMULAS, NOT ACTUAL SUPPLY & DEMAND DATA.
SO WHERE IS THE "MISSING OIL"? I GOT THE NOTE BELOW FROM AN EPG MEMBER WHO IS A VERY SMART OIL MARKET ANALYST:
There are ”missing barrels” in the IEA’s calculation of global crude oil supply and demand. on the supply side and the demand side.
On the supply side, the amount of the over-supply in the crude oil markets since about 1/1/2015 being reported by EIA is larger than worldwide demand plus the increase of oil in OECD storage. The bears, notably Goldman Sachs, say those barrels are in non-OECD storage and in tankers at sea (neither of which is tracked by the EIA or the IEA).
The IEA is accounting for this difference by reporting a large “miscellaneous to balance” (MTB) figure or a plug in order to balance the equation: Worldwide Supply = (Worldwide Demand + Increase in OECD Inventories + Miscellaneous to Balance). The MTB plug is essentially "missing barrels" that should be filling up worldwide inventories, but are not accounted for in the IEA data. The bulls say in previous downturns, demand figures have been subsequently revised higher as MTB figures are revised lower. This suggests that demand is being under-estimated and the crude oil over-supply is not as large as summary IEA figures suggest.
----------------------------
This is EXACTLY the same thing that happened in 2009. When EIA and IEA finally reconciled to actual supply & demand they found that demand (thanks to lower fuel prices) had been much higher than their forecasts. IT IS VERY IMPORTANT THAT ALL OF YOU KNOW THAT WHAT EIA REPORTS AS "ACTUALS" EACH WEEK ARE REALLY FORECASTS. THEIR NUMBERS ARE ALL BASED ON FORMULAS, NOT ACTUAL SUPPLY & DEMAND DATA.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Oil Supply / Demand
From UBS:
Investors may be unnerved by foreign strains, but US domestic demand indicators remain solid. In August, the Conference Board consumer confidence index rose to its highest level since January after a weak July reading; the improvement included the best current labor market assessments since 2008. New home sales rose fairly sharply in July, continuing to chop sideways after a June decline. Home price measures for June were less positive, but their weakness probably reflects seasonal adjustment flaws as it did last year at this time. Conference Board consumer confidence rises 10.5 pts, highest since January In August, the Conference Board consumer confidence bounced back to the highest level since January, rising 10.5 pts to 101.5 (UBSe 95.0, cons 93.4). It included much better assessments of the labor market: as many respondents saw jobs as plentiful as did not: until now, during this recovery, more have always seen jobs as hard to get. Expectations bounced back from August weakness and appear more consistent with the recent, healthy pace of real consumer spending growth. (Please see charts.) In July, other consumer confidence measures had not shown nearly the weakness of the Conference Board measure. Their greater resilience plus the Conference Board rebound suggest that the Conference Board measure's decline was a temporary reaction to China and Greece rather than a sign of US weakening. Foreign strains are likely to drag again on confidence in late August (not covered by this Conference Board survey), but we expect domestic economic momentum will again assuage worries, as it did in this report. New home sales +5.4% New home sales also ratcheted upward in July, reversing most of their prior month's decline, rising 5.4% to 507k
Investors may be unnerved by foreign strains, but US domestic demand indicators remain solid. In August, the Conference Board consumer confidence index rose to its highest level since January after a weak July reading; the improvement included the best current labor market assessments since 2008. New home sales rose fairly sharply in July, continuing to chop sideways after a June decline. Home price measures for June were less positive, but their weakness probably reflects seasonal adjustment flaws as it did last year at this time. Conference Board consumer confidence rises 10.5 pts, highest since January In August, the Conference Board consumer confidence bounced back to the highest level since January, rising 10.5 pts to 101.5 (UBSe 95.0, cons 93.4). It included much better assessments of the labor market: as many respondents saw jobs as plentiful as did not: until now, during this recovery, more have always seen jobs as hard to get. Expectations bounced back from August weakness and appear more consistent with the recent, healthy pace of real consumer spending growth. (Please see charts.) In July, other consumer confidence measures had not shown nearly the weakness of the Conference Board measure. Their greater resilience plus the Conference Board rebound suggest that the Conference Board measure's decline was a temporary reaction to China and Greece rather than a sign of US weakening. Foreign strains are likely to drag again on confidence in late August (not covered by this Conference Board survey), but we expect domestic economic momentum will again assuage worries, as it did in this report. New home sales +5.4% New home sales also ratcheted upward in July, reversing most of their prior month's decline, rising 5.4% to 507k
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group