One of the main reasons why oil prices fell so low and are at the “bottom” for so long, is the imbalance of supply and demand. According to statistics from the International energy Agency (IEA), a on the market each day gets approximately 1.9 million barrels of “extra” oil that do not allow prices to rise. However, about half of this “extra” oil may be merely a statistical error, warns the Wall Street Journal (WSJ).
Approximately 770 thousand barrels of oil, which is not customers arrives daily in the store, another 300 thousand barrels in the same time, is pumped via pipelines or loaded on Board tankers. But what happens to about 800 thousand barrels, asks the WSJ. And there is this oil really?
“The most likely explanation for the most part “missing” barrels is that they just don’t exist,” explained the WSJ analyst at Standard Chartered Horsnell Floor.
Managing Director investing in energy assets Bank Tudor, Pickering, Holt & Co. David Purcell believes that if the “extra” barrels really no, it means that the oil market is stronger than it looks, and the prices for oil can grow faster.
However, other experts, in particular the analysts at DNB Markets believe that mysteriously “disappearing” oil can exist in reality, settling in China and other countries, where accounting is not very accurate.
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According to WSJ, in the last quarter of last year, the volume of the “Ghost” of oil reached 1.1 million barrels, which accounted for approximately 43% of all the “extra” oil on the market. The publication notes that in previous times the volume existing only on paper oil rose to such heights in 1998. Then the U.S. Congress even ordered the audit chamber to check the IEA data, but verification a clear explanation is not given — the auditors confirmed the risk of mistakes in reporting, but found it difficult to estimate their size and how — in the direction of increasing or decreasing such errors distort the result.
The representative of IEA explained to the WSJ that inaccuracies in the statistics may arise due to the exaggeration of volumes of supply in the oil market, underestimation of demand, as well as incorrect assessment of the amount of reserves in countries outside the Organization for economic cooperation and development.
Oil statistics is “not an exact science,” concedes a senior investment analyst at U. S. Bank Rob Hayworth. However, according to him, even if the “missing barrels” is nothing more than a mistake, the market will remain in a state of imbalance.
“The barrels, which we all know still too many,” said Hayworth.
Over the past month from mid-February to mid-March, the price of a barrel of Brent crude oil increased from roughly $30 to $40. According to experts of Citigroup, because of irregularities in the supply of oil from OPEC countries of Nigeria and Iraq. Overall, according to analysts ‘ estimates, these disorders deprive the world market of 800 thousand barrels. oil daily, which is about 1% of world production.
During today’s trading on the stock exchange ICE cost of a barrel of Brent crude oil rose to $41,44, which is 2.75% above the closing level of the previous trading session.