Archive for the ‘oil rigs in Saudi Arabia’ Category
As analysts and pundits keep staring into their crystal balls searching for clues to future moves in the oil price, it may be more helpful to look at some actual developments that may explain the recent strong US stock builds, developments in US total petroleum consumption and what this now may presage about future oil price movements.
In this post I present a closer look at the recent growth in US total petroleum demands split into:
- Development in US total petroleum consumption (inclusive some selected products)
- Rate of stock build of US commercial crude oil stocks
Then a look at developments in crude oil supplies from OPEC where several of the big oil producers in the Middle East have had strong growth in the number of oil rigs since early 2014. Recent media reports about increases in oil supplies from the biggest Middle East oil producer.In Q1 2014 the average daily US stock build was 0.29 Mb/d and during Q1 2015 the average US daily stock build was 1.10 Mb/d.
Demand for US stock build was up 0.8 Mb/d year over year. This stronger stock build temporarily adds to (global) demand and supports the oil price.
What drives this strong stock build is the price spread between contracts for prompt/front month deliveries versus contracts for later deliveries when the futures curve is in what is referred to as contango, refer also figure 3.
The recent strong builds in US crude oil storage may give away some clues about underlying developments in consumption.
Demand = Consumption + Stock changes = Supplies