Just as Global Oil Glut Deepens, China Cuts Oil Imports
“We don’t want to lose our share in the market,” Kuwait Oil Minister Ali al-Omair said on Thursday. OPEC had to maintain production despite the plunge in price since last summer, he said, underscoring Saudi Arabia’s position. OPEC would not cut production to goose prices. It would not let the American fracking boom off the hook.
The price of oil promptly dropped. West Texas Intermediate is trading at $43.79 a barrel as I’m writing this, having annihilated much of the Fed-inspired rally on Wednesday.
No one wants to cut production. In fact, in the US production is still soaring. Demand is lackluster. What gives? Crude oil is piling up around the globe.
Commercial inventories across all OECD countries can now supply 28 days’ of OECD demand, near the very top of the range, the EIA reported.
In the US, the amount of oil in commercial storage facilities (not counting the Strategic Petroleum Reserve) is at historic highs. Another 9.6 million barrels were added during the latest week. To put that in perspective: the US produces 9.3 million barrels per day. So in one week, the US added nearly one day’s production to its already high crude oil stocks! According to the EIA, stocks now amount to 458.5 million barrels, up 22% from a year ago.
By another measure, at the end of February the US was sitting on 29 days’ supply, the most since the 1980s when the last big oil bust was wreaking havoc in the American oil patch.
…click on the above link to read the rest of the article…
