The US Is Exporting Like Mad as Global Oil Stocks Deplete at a Record Pace

Scouting Reports Public Scouting Reports
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Originally published at: https://peakprosperity.com/the-us-is-exporting-like-mad-as-global-oil-stocks-deplete-at-a-record-pace/

Last week, according to the EIA, the US continued to aggressively export its crude oil and gasoline stockpiles.

When we add the 8.6 million barrels withdrawn from the Strategic Petroleum Reserve (SPR) to the 4.3 million barrels drawn from commercial stocks, we find that a total of 12.9 million barrels of crude were removed from the national stockpile and exported to the world.

While this serves to temporarily blunt the observed global price for crude oil and gasoline, it creates the conditions for much higher future prices in the future.

Where did they go? Well, Asian customers alone bought another 7 million barrels of US crude oil for an August delivery:

Weā€™re eating (and selling) our seed corn.

Relatedly, US gasoline stocks are also being exported and are now well below their five-year average and screaming lower right before the US summer driving season:

What happens next is obvious ā€“ US gasoline prices are going to rise, and probably by a lot and soon.

One possible reason global stocks are being drawn down so far and so fast is that the unplanned disruptions to oil production have been larger than first thought. On that front, the US EIA put out this chart showing a nearly 16 Mb/d disruption for April, far higher than the oft-quoted 10-11 Mb/d figure.

The above chart is ā€œall liquids,ā€ so that means the various refined products that are also not leaving the Persian Gulf, besides just crude oil.

But the big problem the world is facing, now exposed by the Iran War, is that the price that oil companies need to turn a profit on new wells is marching toward the price that a debt-addled world can maximally afford to pay for oil.

Someday, when the blue hump converges with the red hump, it will be game over for the system of perpetual debt expansion, which far too many politicians and bankers think is an untouchable divine right of theirs.

The bottom line is that every single day that the Strait remains closed is another day of damage being done to the economic superstructure.

Are you prepared?

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You have wake up calls that make me want to crawl back to bed. And now a scouting report right before bedtime, which will keep me up all night trying to figure out all the preps i havent done yetā€¦

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Iā€™m now in Perth, Australia.

The Australian people seem oblivious to whatā€™s happening in The Strait Jacket of Hormuz.

So far on this trip, Iā€™ve only seen one person reading a book here.

I went into a desolate ā€œDymocksā€ bookstore here yesterday.

An Australian bloke wearing a rugby shirt wandered into the bookstore to hit on the ā€œSheilaā€ working the cash register and asked her in a thick Australian accent:

ā€œWhatā€™s good to read?ā€

Since they are not big readers, can anyone suggest a good Bollywood Movie about Famine in India to recommend to the locals?

ā€œSheilaā€ is a traditional Australian slang term for a woman, derived from the common Irish name SĆ­le (pronounced Shee-la) and in use since the 1830s. Historically used as a neutral counterpart to ā€œbloke,ā€ it is now considered outdated, largely restricted to older generations or the outback, and can be viewed as mildly derogatory

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Just as I hypothesized - itā€™s not gonna be an energy lockdown it will be for hantavirus :exploding_head:

https://x.com/armstrongecon/status/2054697493116440965?s=46

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I just bought a Tesla Y and asked Grok to help me build a completely off-grid charging station for the Tesla.

See separate thread for those doing similar things (or @phecksel, @randommike, @a1topgun and others with Solar generating skills and experience).

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Itā€™s only derogatory in a Feminists eye, other wise viewed as very old fella slang.

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We too are considering a Tesla.

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@cmartenson Could you tell us why there are fewer oil rigs now than a year ago? Is it because the price of oil was too low to motivate oil companies?

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Yes.

I strongly suspect that the Trump administration was using the futures market to suppress the price of oil long before the SoH debacle.

Trump wanted $50 (or less) oil.

That is a completely insufficient price to motivate new drilling in most basins. I know this from first-hand experience. Chris Wright knew it too, but he drank whatever it is they make you drink in DC and spouted Trumpian nonsense about oil being fairly priced at $50.

On top of all that, the IEA was constantly on about oil being 2-3 Mb/d oversupplied despite the fact that oil inventories failed to confirm that thesis by building up by anywhere near that amount.

So the environment was very unfriendly to renewed investment in drilling. That trajectory continues to this day.

For whatever reasons, whether legitimate or due to the ā€œinvisible handā€ of manipulation, the future price for oil is not sufficient to justify vigorous renewed drilling:

image
image1146Ɨ741 187 KB

As of March 20th (the white dots in the above chart), a time relevant to the March-April drilling data I presented in the piece above, the oil futures curve was priced at less than $80/bbl by year-end and then steadily lower and lower all the way to just $50 in 2037.

Big projects are decades long. Would you start a gigantic project where you had to achieve $70 or higher oil, knowing that over the next decade, all you could lock in today was $70+ oil until 2029?

Yeah, me neither.

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Yep, my 10yr old daughter constantly uses the term sheila. Sheā€™s bringing it back into style lol

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Thanks Chris. I appreciate these very much. With the very limited resources we have, Iā€™m plugging along getting trees logged and firewood stacked; waiting for the ATS and 150ā€™ of 4/0-4/0-2/0 delivered to get the solar power system built; starting raingutter water catchment system; tending the garden (I might get potatoes and carrots this time and not murder them); and of course fixing/maintaining equipment (my biggest bane).

Stopped trying to convince anyone. The right v left; R v D I think is above my pay grade to change. Fortunately, we live in a non-bitchin looking house on a long poorly paved very rural road (with excellent sight lines).

Godā€™s blessed us way more than I deserve.

BTW, love Temu but the damn silly ā€œone more spin/one more purchase and you get a free solar panelā€ funhouse stuff is really annoying.

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Whatā€™s an ATS? And a suggestion to all who post comments and questions. Could we possibly make a concerted effort to not use acronyms without explaining what they mean? So in a comment first write in complete form what you are referring to and then in brackets the acronym for use further down in the comment. Otherwise the value of the comment or question is probably lost on a majority of readers since not all of us have the same level of knowledge in various fields. It might seem like a detail but it is really annoying. Only in the last weeks, Iā€™ve had to search many times for acronym meanings (VLCC, ATS, GCC, etc). Sometimes google helps but not always as an acronym can refer to many different things depending on context. So please, again, letā€™s make a concerted effort for all to be able to enjoy this site without it being a learning chore. Thanks.

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Alternatively, maybe the siteā€™s managers could come up with a way for acronyms to appear as hypertext links that we could click on and that would then automatically send us to a library of acronyms with their respective meanings. Since I am not tech savvy at all, i have no clue how feasible and/or how complicated such a tool would entail to be created. So it is just a suggestion from a tech dinosaur. Please read it as such.

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Given that the post is about solar setup, I believe ATS means (Automatic Transfer Switch).

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As much as I do appreciate all the information that gets posted on P/P every day, I have to agree that the common use of acronym soup in daily conversation is a problem.
As a techy kindā€™a guy Iā€™ve been well and truly sick of this for longer than most.
Iā€™m pretty sure itā€™s a psyop.
And yes, ATS means automatic transfer switch.
But it doesnā€™t clarify if itā€™s a live transfer switch (which maintains power while switching) or just an interrupt switch which will do the job, but also make all your sensitive electronics blink while doing so.
Oh the ambiguity!

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Itā€™s nice to see that Iā€™m not alone in this strategy. I intentionally have left my previous and current house and yard looking not as nice as I could. Iā€™ve always had this desire to use the ā€˜Gray Manā€™ strategy on my properties. I donā€™t want to live in the Home Alone house, the biggest, richest-looking one on the street, motivating bad guys to single it out. I want my house looking a little dingy and rundown, without an impeccably manicured lawn.

A friend once described the driveway of my last house as looking like a dirt road that teenagers in a movie would park on to make out before the serial killer shows up. That pleased me greatly.

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I was listening to this truly excellent podast with Alex Krainer and Simon Dixon (linked below). Its great for two reasons:

  1. Simon does his usual 10 minute speeches that are sometimes hard to follow but you can sort of make out that he is describing something youā€™d better pay attention to and then

  2. Alex Krainer engages him with really thoughful questions and it all turns into an amazing discussion between two real outside thinkers.

Anyway, Alex opens with the opinion that Covid was just to deal with a repo-crisis. I still have a hard time with this idea but now you link us Martin Armstrong saying that essentially the same will happen again.

I need to open my overton window another crackā€¦

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https://x.com/Megatron_ron/status/2054855204055683478?s=20

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Aussies are Sheilas and Bruces!

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Thinking about what youā€™re saying, I was wondering one nuance.

If you take the prior shipments, add the ā€œfrom storageā€ increased shipments, it doesnā€™t seem like this basic math tells the story that accurately.

If I was in the business of selling oil, Iā€™d look for ways to decrease the margin between gross and net deliveries.

So what Iā€™m asking is, arenā€™t we dealing with net new inefficiencies due to using the best known alternative to the previous delivery channels, which were likely optimized?