The reality is that unrecorded inventories are huge. This is an old argument -- a bogus argument -- that has been presented for many years, but there is no long-term silver shortage.
The reality is that unrecorded inventories are huge. This is an old argument -- a bogus argument -- that has been presented for many years, but there is no long-term silver shortage.
It's a simple matter of supply and demand. We continue to have more home buyers than sellers in most of the country, which results in tight housing inventories and higher rates of home price appreciation.
When prices are at these heights you need fresh worrisome news to keep us moving higher. Crude inventories are swelling globally. We'll be paying attention to gasoline because there is a question about supplies as summer approaches.
Using Valero's forecast and a 4.3 3-year historical average for this period, we estimate an incremental supply loss of about 260,000 bd over this 4-month period. Moreover, with much of the turnaround work expected to focus on the refineries' cat cracking units, a disproportionate amount of the production loss will likely be gasoline, reducing inventories (currently at historically average levels) ahead of the summer driving season.
There is spotty evidence that in some stores inventories are running low, but considering that the action that's in the stores is not particularly hot these days, that (low inventories) may not be the worst possible fate. In many cases a lot of stores reduced the orders they placed, and in some cases, canceled orders, which is exactly what's happening.
Economic trends favor the occurrence of write-downs at other companies. Crude oil prices have been cut in half and product inventories (remain at record levels). The thing that I think is more telling is that (these companies) are taking write-downs now in anticipation that crude prices will be low for the next few years.
Inventories can be managed, but people must be led.
If the divergence between sales and inventories continues, the inventory-to-sales ratio will breach the critical five months' supply threshold by year-end, ... Price action is sure to follow.
Expressing the thoughts of my comrades, I suggested, among other means, the organization of an international information service on inventories, on production, and on the needs of the various countries for raw materials.
Customers we talk to are saying they're going to respond to increasing demand, but they won't do anything in anticipation of increasing demand, ... That's why employment, inventories and manufacturing will move in positive directions, but I don't think it will be anything spectacular.
The market will move back and forth in the weeks ahead. There is bad geopolitical news at the same time we are looking at high inventories.
Less emphasis on inventories, I think, may tend to dampen business cycles, because business cycles are typically in the grasp of inventory cycles and heavy industry cycles.
Unless there is a quick rebound in sales, this suggests further weakness in production and declines in inventories over the months ahead.
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We've had a tug of war between fundamentals and geopolitical worries. It doesn't look like Iran will take any action soon, so the attention of the market is tilting to the inventories. There's a surfeit of oil available on the world market.
The real dichotomy in this market is that crude inventories are very high and that could make for some violent, back-and-forth price action. For the foreseeable future, the path of least resistance remains up until there is a significant structural economic or political shift.
© 2020 Inspirational Stories
© 2020 Inspirational Stories