Tom Hanna's Lifestream

US petroleum inventories have become exceptionally strong over the last couple of weeks, with big increases this week in crude oil and major refined product categories. With crude oil inventories above the average range for the season and the major refined products all at least in the upper half of their average ranges in absolute terms and well above average in days of supply, it's reasonable to talk about a supply glut in the US. Between commercial inventories and the Strategic Petroleum Reserve, there is over 100 days worth of crude oil imports in storage (over 500 days worth of Persian Gulf sourced imports) and substantial domestic production increases coming on line in the next few months even as demand continues to erode.

US Petroleum Supplies and Refining At a Glance

Total Petroleum Inventories: Up 7.7 million barrels Crude Oil Inventories: Up 6.7 million barrels Gasoline Inventories: Up 3.3 million barrels Distillate Fuels Inventories: Up 1.8 million barrels Propane/propylene inventories: Up 500,000 barrels Refinery Crude Inputs: 14.5 million barrels/day Change: Up 332,000 barrels/day Refinery Activity: 84.6%

US Petroleum Demand At a Glance Compared to Same 4-Week Period Last Year

Total Products Supplied: Down 2.9% Gasoline: Down 2.2% Distillate Fuel: Up 0.3% Jet Fuel: Down 9%

This Week in Petroleum has the skinny on where that new production is coming from and it should come as no surprise – massive oil company investment produced the improvements:

Spending for investing activities averaged $95 billion per year (in constant 2007 dollars) from 2000 to 2007, up from an average of $51 billion for the previous 8 years (Figure 1), and peaked at $179 billion in 2006. The higher investment spending resulted from higher cash flow from operations, which, in turn, resulted from the significant increases in oil prices that occurred over the past several years.

Petroleum Status Report and This Week in Petroleum: January 7, 2009 [PDF] Full current report with data tables [PDF]

You're reading a post from Financial Options, hopefully in your feed reader and not on a scraper site. Click through for the original and more like it. Time to talk oil glut?