Oil? Don’t buy It

Oil Hits Critical Choke Point: Why “The Market Faces A Round Of Rapid Stockbuilds”

Tyler Durden on 03/23/2016

One month ago, just as Cushing storage was rapidly approaching its operational capacity,we warned that Cushing (and increasingly all parts of PADD 2) is denying storage requests … hinting that it was just a matter of time before excess production would be shifted to other regions, most notably the Gulf Coast, or PADD 3.

In the intervening month  … the excess supply situation in the US is getting worse by the day, (but) not even we expected the dour picture painted by some key industry participants. … Ian Taylor, chief executive of top oil trader Vitol, said on Tuesday that “stocks of crude and products continue to build and these will weigh upon the market.” …

(Gasoline and diesel/heating fuel are in a similar situation.)

… with every passing week in which nothing changes in the fundamental supply/demand picture, the most likely outcome will be a violent inventory liquidation over the next few weeks, one which will be accompanied by a substantial plunge in oil prices resulting from wholesale dumping as producers rush to sell product to anyone who will buy it. (And this will I suppose lead to a wave of credit downgrades on oil producers and defaults, driving high-yield bonds down.)

 (Read More)

About icliks

Biding my time in central ms ... yours too, if ur reading this.
This entry was posted in Energy, Investing, market timing, oil trade, stocks and bonds and tagged , , , , , , , , . Bookmark the permalink.