Tuesday, March 24, 2015

All Around the Mulberry Bush

I haven't talked about the economy much lately because what difference does it make? I did find this article entitled Sorry, but there was never an oil storage crisis super funny. I mean, I don't know what oil is going to do - but I'm betting the asshole that wrote this article is wrong.

He concludes that oil is not going to crash because companies haven't started utilising floating storage yet. I talked about this a couple of months ago and concluded that companies must not be expecting oil to rebound like it did in 2009 and that is the reason they are not using floating storage. It mean, it's very costly to store oil that way. If oil doesn't rebound very quickly, you will eat into your profits.

So, I had to go over and see how Cushing was doing today. And they are at 54,403 barrels. They top out at 60,000 barrels. I mean, you can look at the chart and it seems imminently obvious this is a steeper build than any seen since before 2005 by an insane margin. If this were a stock I would tell you to run like the wind. That is a moonshot chart and that never ever ends well.

When I wrote that article just one month ago - Cushing was at 46,261 barrels. This place doesn't have even one month left at the current build rate.

Update -  I just remembered that the government took 5 million barrels off the market to replenish the strategic oil reserve. So this build would have been even steeper if it weren't for that. That might have put Cushing at full.

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