It appears that petroleum inventories are on a steady incline. The news stations last week said that this is what is rattling the price of oil. West Texas Intermediate is trading below $55.
The last data point on this graph is from May 31, 2019. I have been speaking to engineers in the business, and the consensus is that the industry needs an oil price of $70, at a minimum, to get those 3 billion dollar revamps and upgrades to start rolling. And we all know what happens when projects of that magnitude are implemented in the business: steel production, equipment sales, hiring, more transportation, etc.
I have to admit, I am mystified. Where is all this oil coming from? The way I see things is that, Venezuela is essentially out, Qatar quit OPEC, and Iran is boycotted. Why is the US still stockpiling petroleum products? What is it going to take to kickoff all those revamp projects that we all know are sitting on the “back burner”? Comments are welcome.