Singapore And China Among A Long List Of Nations Whose Stored Oil Volumes Confound Experts

Analysts say it's impossible to determine how much oil is really stockpiled globally.

It's a given that the size of oil inventories worldwide is key in determining when the market will ultimately rebalance, and experts warn that this coupled with persistent overproduction means continued market turmoil – but now comes troubling news that stockpiles may be far larger than thought, and impossible to calculate.

Harish Sundaresh, portfolio manager and commodities strategist for Loomis, Sayles & Co., told the Wall Street Journal that millions of barrels of oil are going to places where tracking is spotty at best: "The data itself is so inconsistent; in countries like Nigeria, Brazil, Angola, it's not trustable."

Indeed, analysts in May predicted Nigerian output would fall due to militant attacks on its production facilities, which helped push oil prices up to $50 per barrel; but exports remained consistent at over 1.5 million barrels per day, causing onlookers to wonder whether the product was drawn from storage or if production was higher than initially assumed.

The Journal notes that since countries such as Russia and China don't report their oil storage levels and oil companies with parked supertankers full of cargo aren't obliged to disclose their supply, oil markets are therefore "more cryptic and volatile."

Singapore is another nation that supposedly puzzles analysts, because it's unclear how much oil is in an estimated 23 supertankers that have been anchored in that country's surrounding waterways since the beginning of this month, according to Thomson Reuters's vessel-tracking service (which bases its volume estimates on a vessel's waterline level).

Determining whether these vessels are carrying crude, fuel oil, or indeed simply seawater, is another problem.

For the record, the International Energy Agency says floating storage rose to 95 million barrels in June, the highest level since 2009.

But China is arguably the most confounding nation of all: government data shows oil imports rising at a faster rate than refiners are processing it, and there's no clear idea if an estimated 160 million barrels of surplus accumulated during the first half of this year have gone to commercial tanks or government strategic reserves (if the latter, then demand could shrink when the tanks reach capacity – which some say could happen this year).