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    Mar
    31

    Gasoline Demand vs Price is Correlation Real?

    Price of gasoline does not seem to correlate with demand.
    Looking at the adjacent graph we conclude that the price of gasoline in the US has little correlation with the demand. In fact either on May 2009 and again early 2015 when the price of gasoline bottomed in the US, the consumption of gasoline either stayed the same or was lowered by a little. Additionally in the run from 2001 to 2008 –when the price topped at $4 per gallon the consumption increased from about 9000 bpd to 9500 bpd. On the summit of Sept 2008 the priced plummeted to $1.75 and the demand maintained a negative slope. This was probably caused by a diminishing buying power – but also likely by the advent of more efficient vehicles.

     

    Mar
    27

    Cushing Storage close to capacity but does it correlate to price?

    Storage capacity at Cushing at record levels but not at maximum percentage.

    The total capacity is 70.8 million barrels and it currently stands at 50.4 MM BBL or 77% of capacity. However, in January 2011 the storage at Cushing was at 90% capacity.

    When we compare the storage capacity to the price of the current month in NYMEX (CL1!) we find no correlation.

    graph of weekly crude oil inventory and storage capacities at Cushing, Oklahoma, as explained in the article text

    https://dwq4do82y8xi7.cloudfront.net/x/w5xIkGU0/

    http://www.eia.gov/todayinenergy/detail.cfm?id=20472

     

    Mar
    26

    A View of Hormuz

    Hormuz is the choke point for oil traffic flowing out of the Persian Gulf. Worries about the political health in this region affect the psychology and behavior of oil traders.
    This is the current view of the Straits of Hormuz. Touch any vessel to find description; red-ones are tankers.




    Mar
    26

    Is Yemen a strong enough catalyst for oil or just a distraction?

    Much is talked on the news these days about how the airstrikes in Yemen created a spike in the oil market. The story is based on fear (or hope) for a supply change by additional hurdle on the oul moving out of the Persian Gulf via the strait of Hormuz.

    I mention hope because it is always in the hope of traders to have a catalyst that would give indication on a specific direction on price. It creates a psychological floor which allows to additional money to come onto the market. This usually comes at a price.

    Look at the chart below.  On February we experience a similar spike.  If the Geopolitical event (Yemen) is followed is an actual cut in global supply we will see a continuous price hike which will make the producers and traders very wealthy.  However, if on the other hand these same people fill their hands with paper-oil or even physical oil that the maker can not absorb the price will plummet fast.

    Time will definitely tell.  I am not trading oil these days... there are lows to find.... but eventually we will see higher prices.

    https://dwq4do82y8xi7.cloudfront.net/x/OKPaL9la/

    Then again, the weekly chart is getting closer to paint a double bottom -- Yet, I can imagine a triple-bottom / head & shoulders:

    https://dwq4do82y8xi7.cloudfront.net/x/Q4901xWx/