Big Trouble Ahead for Oil
“If you want to know what 2015 has in store for oil prices, just look at where stores of oil ended last year,” the Wall Street Journal reports.
“U.S. commercial stocks of crude oil and refined products—excluding the roughly 700 million barrels held in the Strategic Petroleum Reserve—were just shy of 1.14 billion barrels at the end of December, according to Energy Department data. More important than the absolute level is what happened to commercial stocks last month: They went up. Refiners tend to run down their tanks as year-end approaches to help minimize tax bills. That stocks rose regardless is a bad sign for those banking on an oil-price rebound.”
“Looking back to 1980, U.S. commercial inventories of oil have risen in December in only two years: in 2014 and the financial crisis year of 2008. Even back then, as the global economy was seizing, stocks rose by just 4.7 million barrels, virtually all of which was crude oil.”