Refinery Acquisitions Reduce Saudi Risks, Increase U.S. Energy Security Risks

Robert Boslego - INO.com Contributor - Energies


A recent article noted that Saudi Arabia Is Buying Up America's Oil Assets. Saudi Aramco is buying U.S. refining and petrochemical assets as well as energy and technology companies through its Saudi Aramco Energy Ventures LLC fund.
Congress has recently received a Long-Term Strategic Review (LTSR) of the Strategic Petroleum Reserve. The SPR's mission is to protect the U.S. from severe petroleum interruptions. The LTSR was intended to identify the key challenges that could impact the ability of the SPR to accomplish its mission.

I submit that it ignores a key challenge, the foreign ownership of refineries and petrochemical plants, that could render the SPR crude supplies meaningless.

The existence of the SPR is a key factor determining oil prices because the market does not have to factor in large interruptions of crude supply into prices because it knows the government has the SPR and will use it. Continue reading "Refinery Acquisitions Reduce Saudi Risks, Increase U.S. Energy Security Risks"

Why Oil Is At $50 With An Inventory Glut

Robert Boslego - INO.com Contributor - Energies


According to the Energy Information Administration (EIA), world oil inventories are about 425 million barrels higher than their “normal” levels. In the U.S., inventories stand a 1.368 billion barrels, a few million off their recent peak. Given that supply glut, how could oil futures prices be at $50 after falling below $30?

U.S. Crude and Product Stocks

One answer is that the futures market assesses future developments. As discussed below, the peak of the glut appears behind us and the U.S. oil market is tightening, as rising demand narrows the supply-demand gap. This is best observed by looking at the trends in inventory storage changes for both petroleum products and crude oil. Continue reading "Why Oil Is At $50 With An Inventory Glut"