{"id":198557,"date":"2010-01-19T11:18:36","date_gmt":"2010-01-19T16:18:36","guid":{"rendered":"http:\/\/www.businessinsider.com\/gartman-the-nations-crude-refiners-have-turned-into-storers-2010-1"},"modified":"2010-01-19T11:18:36","modified_gmt":"2010-01-19T16:18:36","slug":"gartman-why-the-nations-crude-refiners-have-turned-into-storers","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/198557","title":{"rendered":"Gartman: Why The Nation’s Crude Refiners Have Turned Into Storers"},"content":{"rendered":"

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In this morning’s Gartman Letter, Dennis Gartman<\/a> went off on a politcal tangent mostly.<\/p>\n

But buried within was a beautiful nugget about energy<\/a> expectations for 2010, with a strong emphasis on crude demand.<\/p>\n

The Gartman Letter<\/a>: As we have noted here in recent days, the contangos for both Brent and WTI continue to widen, seemingly inexorably, as crude bids for storage and as the long-only funds continue to do their buying in the deferred futures. This has given rise to a very interesting phenomenon where the nation’s crude oil refiners have become storers of crude rather than refiners of crude. Refinery margins are low but returns to storage are large… and are rising. <\/p>\n

Hence the only buying taking place is by the refiners and others in the industry who are willing to secure storage facilities, including tankers off-shore, buying spot crude and hedge it in the same deferred futures that the funds are bidding for. This is the strangest of symbiotic relationships, but it is working for both.<\/p>\n

What it breaks down to, says Gartman, is that agencies are predicting less global demand for crude oil this year. Why produce more than necessary and store your surplus?<\/p>\n

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