US oil inventories fall to 'precariously low' level as Iran war disrupts supply
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Re: US oil inventories fall to 'precariously low' level as Iran war disrupts supply
#2> The US government is continuing to release oil from its strategic petroleum reserve, which saw a drawdown of 3.8mn barrels to 307.7mn barrels — the lowest level in more than 40 years. Its operational minimum, below which further withdrawals risk damaging infrastructure and disrupting pipeline operations, is estimated at 180mn to 200mn barrels, according to industry analysts.
So [EDIT: half] a year of reserves left at current rates and levels.
Re: US oil inventories fall to 'precariously low' level as Iran war disrupts supply
#3> The US government is continuing to release oil from its strategic petroleum reserve, which saw a drawdown of 3.8mn barrels to 307.7mn barrels — the lowest level in more than 40 years. Its operational minimum, below which further withdrawals risk damaging infrastructure and disrupting pipeline operations, is estimated at 180mn to 200mn barrels, according to industry analysts. So [EDIT: half] a year of reserves left…
No, less than a year, much less. There needs to be a certain level maintained in order to keep pressure and lot of the bottom stuff is unusable because of contaminants - it's like sludge.
Re: US oil inventories fall to 'precariously low' level as Iran war disrupts supply
#4> The US government is continuing to release oil from its strategic petroleum reserve, which saw a drawdown of 3.8mn barrels to 307.7mn barrels — the lowest level in more than 40 years. Its operational minimum, below which further withdrawals risk damaging infrastructure and disrupting pipeline operations, is estimated at 180mn to 200mn barrels, according to industry analysts. So [EDIT: half] a year of reserves left…
[deleted]
Re: US oil inventories fall to 'precariously low' level as Iran war disrupts supply
#5> The US government is continuing to release oil from its strategic petroleum reserve, which saw a drawdown of 3.8mn barrels to 307.7mn barrels — the lowest level in more than 40 years. Its operational minimum, below which further withdrawals risk damaging infrastructure and disrupting pipeline operations, is estimated at 180mn to 200mn barrels, according to industry analysts. So [EDIT: half] a year of reserves left…
No, less than a year, much less. There needs to be a certain level maintained in order to keep pressure and lot of the bottom stuff is unusable because of contaminants - it's like sludge.
> There needs to be a certain level maintained
Isn't that the "180mn to 200mn barrels"?
Re: US oil inventories fall to 'precariously low' level as Iran war disrupts supply
#6> The US government is continuing to release oil from its strategic petroleum reserve, which saw a drawdown of 3.8mn barrels to 307.7mn barrels — the lowest level in more than 40 years. Its operational minimum, below which further withdrawals risk damaging infrastructure and disrupting pipeline operations, is estimated at 180mn to 200mn barrels, according to industry analysts. So [EDIT: half] a year of reserves left…
As the private/working reserves are set to reach operational minimums in a month or less at the current pace, the SPR will have to increase draw rate or there will have to be further demand destruction. If it goes to 7mn a week, below the 9.9mn peak draw recorded, that's 4.5 months. If it has to exceed peak rates as private/working reserves running out bites more than the optimistic numbers I'm using, or if China returns closer to pre-war oil imports, it will run out in 2-3 months. Before it runs out, the maximum draw rate will likely start falling - there are multiple facilities and some are already at or close to operational minimums - which will force demand destruction even before operational minimums.
The operational minimums for commercial crude inventories are estimated at 300-380mn barrels, with current inventories at . Weekly draw rate this week was 7.2mn just for the commercial inventories, and levels were ~400mn barrels. So there's 20-100mn barrels remaining in the commercial inventory. Even moreso than the SPR, this is uneven, and maximum draw rates will decrease as individual storage reaches minimums.
Re: US oil inventories fall to 'precariously low' level as Iran war disrupts supply
#7Earlier quoted context omitted.
No, less than a year, much less. There needs to be a certain level maintained in order to keep pressure and lot of the bottom stuff is unusable because of contaminants - it's like sludge.
> There needs to be a certain level maintained Isn't that the "180mn to 200mn barrels"?
~300 - 200 = 100mn useful barrels.
If we're drawing it down by about 4 a week, that's about 25 weeks.
If it's really closer to the 180 needed to prevent collapse and hit unusable supply then it's 120mn barrels and we're at 30 weeks.
A year is 52 weeks.
That also is based on a massive assumption of constant draw rate. Something is probably going to change, who knows when. Maybe the war ends and things actually reopen soon. Maybe Iran manages to blow up Saudi pipelines avoiding the straight. Maybe China's SPR runs out (nobody knows what it's at) and international demand skyrockets again. Other reserves are likely to be eliminated soon as well, putting more international pressure.
I wouldn't have a clue what the rate will be in a month or two, but I can't imagine it'll be anywhere near the same as the past few weeks.
Re: US oil inventories fall to 'precariously low' level as Iran war disrupts supply
#8Earlier quoted context omitted.
No, less than a year, much less. There needs to be a certain level maintained in order to keep pressure and lot of the bottom stuff is unusable because of contaminants - it's like sludge.
> There needs to be a certain level maintained Isn't that the "180mn to 200mn barrels"?
From what I understand, below 300 you start having issues, there's also a minimum national security level at 250 (not legally binding).
Re: US oil inventories fall to 'precariously low' level as Iran war disrupts supply
#9The fun part of this is the crack spread doesn't care about the relatively low price that crude is selling for. Refined petroleum is going for eye-watering prices, and will continue to do so for a very long time, even if peace breaks out tomorrow.
Also seems pretty doubtful that oil prices would drop even if the war ended, given that everyone is going to be scrambling to refill their reserves for a very long time. On top of that, a lot of wells have been capped, which is a destructive act, so it'll take years to repair the supply.
The real winners will be everyone who destroyed their own oil demand. I went out and bought an EV in May to replace an ICE vehicle, and the other car in the household hasn't burned through a full tank in the months since. They may have killed the EV subsidies in the US but they just went out and created a huge regressive tax on everyone not driving an EV.
Re: US oil inventories fall to 'precariously low' level as Iran war disrupts supply
#10Earlier quoted context omitted.
> There needs to be a certain level maintained Isn't that the "180mn to 200mn barrels"?
~300 - 200 = 100mn useful barrels. If we're drawing it down by about 4 a week, that's about 25 weeks. If it's really closer to the 180 needed to prevent collapse and hit unusable supply then it's 120mn barrels and we're at 30 weeks. A year is 52 weeks. That also is based on a massive assumption of constant draw rate. Something is probably going to change, who knows when. Maybe the war ends and things actually reopen…
Oh yeah, I fucked up my math. Thanks.