Publications: Notes at the Margin

Oil Inventories, Market Foreclosure, and BPT (March 21, 2016)


This Notes at the Margin covers three topics. Missing barrels are the first. Friday, The Wall Street Journal raised the issue, publishing a story that likely raised the hopes of hedge fund managers looking for higher crude oil prices. We take the role of killjoy, suggesting the story of missing barrels is likely wrong because the costs to store oil at sea have dropped sharply. Market foreclosure is the second topic. Last week, Shell and Saudi Aramco announced they would break up their joint US refining venture. The divorce will allow Saudi Arabia to buy more refineries in the United States. Friday, Reuters indicated that the Saudis intended to do this, which would be a rational step for Aramco. The collapse of the BP Prudhoe Bay Royalty Trust share prices is our third subject. The numbers suggest shares now may be worth around $10 at best.


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