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The crude oil market is all tears

Crude oil The data is graphed here with tables

The commercial -crude oil stock in USA has reached 517 million barrels this week (excluding the 696 million barrels of SPR) which is the highest in living memory pushing the combined petroleum stocks of USA to more than 2 trillion barrels (2,041,428,000) that is 127 days of supply

On two occasions, once in 2014 ( Cushing the Hell Gate ) , and again in 2015 (( (crude oil avalanche is imminent in june) we warned that the prices will collapse, and it did

Today, we are repeating or warning that not only a crude oil avalanche is imminent next august ,but it also is threating the price structure of the oil industry the Crude oil stock is not only too high and higher than 2014 and 2015, but it also comes at a time when

the world economy is heading towards a prolonged recession and perhaps a depression .Also

1- Most oil producers have piled up unprecedented level of crude oil stocks on ships and on land in India and Singapore Europe plus their own facilities….. a call for production “ Freez will not be enough to unload these huge quantities”

2-This recession has just began taking –its-toll on many large oil consuming economies and spreading like hay on fire ,to oil producing countries , and countries like Brazil.. which will causes a downward sporal not only on crude oil prices but the raw material and commodities in general

3-Iran, Iraq, Venezuela …are determined to make up for lost revenues. And are willing to drop any oil sale restrictions of the yesteryears, consequently flooding the market with penniless traders carrying authorizations from teapot refineries

4- The crude oil market, once protected by the major oil companies through the monopoly over the source of supply of crude oil, and imposing strict conditions on the crude buyers. Now that supremacy is being challenged by the new oil barons who are eager to sell to any one .

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We cannot see how that supremacy and order can be restored without a very prolonged period of low oil prices ( It is like two persons biting each other's finger, whoever, screams first will let the other man’s finger loose, and he surrenders.

"The curtain has been raised for the face-off between the Major Big oil companies and the Small oil barons "

Crude oil This fight must go to the bitter end else these new oil barons are waiting along the side of the road to jump on the bandwagon again once the crude prices become economical

It is the fight between the major Oil companies , trying to restore supremacy and the new oil barons. with opec paying heavly for the tickets as spectator

Although the oil barons are screaming all the way to the banks to reschedule their debts, and they have already stopped many drilling activities but they are not dead . What is encouraging the new oil bourns to stay is the cries of Venezuela, Russia, and the threats of Saudi Arabia (calling on the frackers : “Cut Cost or leave “) …. And what is giving the oil barons an alleviate heart beat is the position of UAE , of “ Leave it to the market …. “else the Majors may have no choice but to take off the gloves .

Unless order is retored to the oil industry, the price structure is in Danger

… for the first time we see , refiners, specially teapot refiners, are flooding the market , looking for cash distressed cargos and on the supply side , the market is as disorderly and noisy as the Fresh Vegetable Market at the end of the day of closing time selling at any price .

 crude now

Jabbar al-Jaf Econometrician Analyst