Vet67to82 (< 20)

Shipping 'n crude supply

September 04, 2008 – Comments (1) | RELATED TICKERS: DHT , FRO , SFL

  Well. here we are.  The US Energy Information Administration (US EIA) will be reporting the gas and crude supply this AM, gas at 10:30 and crude at 11:00 AM due to the holiday shortened week.  I expect the crude supply to be down MORE than 5 million barrels ...

   First, the hurricane has probably stacked ships up in the Atlantic ...  but their cargo  doesn't count as supply 'till they've offloaded at the terminal. 

   Second, read the DHT Maritime 2d quarter report:

 "A balanced tanker demand and supply is keeping freight rates at reasonable levels. The market appear to be positively affected by supply factors such as slow down in speed and port delays increasing the length of voyages and ton/mile demand. In addition, there is the increased commercial obsolescence, scrapping and banning of single hull tankers in advance of the mandatory phase out commencing in 2010."

   Third, everyone's moaning and groaning about gas prices, and windfall profits ... NO ONE  is thinking about the 300 million barrels in INVENTORY being worth 33 BILLION dollars ( figured at $110/barrel crude )  of the majors and the refiners money ...   When crude was $10, $20, even $50 per barrel it made sense to buy and store it ... NOT so when it gets above $100 per barrel !!!

   Soooo, I expect the US EIA to continue reporting a declining crude supply.  The question is,  what supply level, measured in Billions of dollars, will the majors and the refiners be comfortable with ...    Or, more realistically, what level will panic the US elected officials to SHUTUP about windfall profits ... ????   We're not there yet. 

   In any case, the shippers will continue to benefit.