Monday, May 25, 2009

China hoards cheaper oil, increasing storage by 400,000 barrels a day since November

SHOOT: Countries and companies are wise to do this because it is just a matter of time before depleting oil supplies begin to bite and that means one thing - spiking energy prices, and further demand destruction associated with a supply crunch.
clipped from

The economic recovery may yet tarry, and oil demand is still anemic, but there might be a solid reason crude oil has perched above $60 a barrel. Energy analysts at Sanford Bernstein say eye-in-the-sky satellite images from Google show the Chinese are packing away a rising amount of crude in storage tanks.

“Our analysis confirms that tanker capacity arrivals into China have spiked up in recent months, in line with imports, but more importantly, tanker arrivals into Strategic Petroleum Reserve ports have increased materially,” Bernstein says Friday in a research report.

Just as satellite imaging has helped fuel debate over the true state of oil supplies—especially in Saudi Arabia—the new technology promises to give oil-market watchers a chance to crack the demand side of the puzzle too.

Those barrels are tiny in the overall scheme of the global oil market, but when crude consumption has gone negative in the U.S. and elsewhere, those added barrels do matter.

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