Japanese Statements Don't Match Reality / Dollar vs. Yen and Crude Oil Stockpiles

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Let's see here, strong dollar weak yen, no intervention by the Japanese Central bankers in sight, VLCC rates up to Asia by 10 WS in two days and the Japs aren't stockpiling? The article says they have 165 days worth. Guess what, they don't! Not according to the most recent data I have, I show them at 450 million bbls. Also, if you take their stated number you only come up with 106 days supply anyway. These releases are smokescreens. Those boys are buying crude. The freight rates don't lie. Unless they're running a bunch of empty 2.4 million barrel vessels from the Mid East to Japan for the hell of it.

Liar, liar pants on fire.

Here's the deal, the Japanese are net short crude by 5.4 million bbls. per day. They have NO domestic crude supply. They must buy 5.4 mil bbls per day no matter what.

Their historic stockpiles are currently at about 85 days supply as of June. Previously, MITI had said that they would be stockpiling an extra 2 months of crude oil supply. I have seen VLCC rates climb signifigantly to Asia (spec. Japan) in the last two days, and then this press release below. Make no mistake, THEY ARE OUT THERE GETTING PHYSICAL BBLS. Either that or thier chartering empty VLCC's just for the fun of it. This is one reason, along with thier marginally recovering economy, that the BOJ has not intervened on the dollar/yen scene. They are able to buy their extra bbls. cheap.

For educational and research purposes only: > 391--Japan not to boost crude stocks for Y2K preparation > Tokyo (Platt's)--1Sep1999/236 am EDT/636 GMT > Japan's Ministry of International Trade and Industry has no > intention to urge the country's refiners to increase their crude > stocks towards the end of this year in response to concerns over > the Year 2000 computer bug, a MITI official said. That is > because Japan has ample strategic oil reserves in case of an > emergency, he noted. "We hold 165-day equivalent of oil stocks > (as of the end of June) that are ready to use in case of some > crisis. So we don't worry too much about crude stocks. Our > concern is more of computer systems at refineries," he said. A > source at a refiner also downplayed a possible impact by the Y2K > bug in terms of crude stocks. "We have not heard any requests on > the matter from MITI. As a refiner, we also have no intention to > build up our crude stocks for the Y2K issue," he said. > --Platt's Global Alert-- > > 392--Japan-Y2K 2: Refiners to make crisis management plans > Tokyo (Platt's)--1Sep1999/237 am EDT/637 GMT > Meanwhile, the Ministry of International Trade and Industry has > urged Japanese refiners to voluntarily make crisis management > plans in case of refinery troubles caused by the Y2K bug, the > MITI official said. "The Petroleum Association of Japan is > leading refiners for that matter. Basically, refiners should be > ready to cope with any possible system troubles at refineries," > the official noted. Japan's strategic oil reserves comprise two > parts: private and government stocks. As for the strategic > stocks at the end of June, latest figures available, Japan holds > an oil products converted total of 91.89-mil kiloliters (577.9- > mil bbl), equivalent of 165-day's requirements. > Begins p391 --Platt's Global Alert-- > [0392] [P] [GS] [N] [QQ] > >

-- Gordon (g_gecko_69@hotmail.com), September 01, 1999

Answers

Gordon

VLCC is very large crude carrier right? What is WS? I look forward to your posts so please keep them coming. Are the refineries in Japan in trouble? If they started as late in the game as the banks then there will be a real mess over there.

-- Mike Lang (webflier@erols.com), September 01, 1999.


WS means world scale. It is a commonly used term in crude and other shipping operations. The worldscale is a quotation system which is based upon calculations of a combination of factors including the gravity of the crude and a flat rate from port to port etc. Essentially it is a measure of the cost of transporting the crude. Think of it as "transportation cost dollars". Anyway you can look at it as a measure of the availability of tonnage. The higher the WS, the shorter the market in tonnage (er available vessels).

My post here is merely a wake up call to all that the "commercial wars" have already begun. There has been a great deal written about what JQ Public will do over the millenium, but not much on what commercial entities will do. By far the greater impact will occur on the world markets and commercial trading operations. There will be an enormous tumult throughout the global commodities and financial markets as players step away from the risk table. It's started already, first JGB's then Gilts and today the FED raised the amount that dealers could borrow re:treasuries. They doubled it!!! A single firm can now borrow up to a billion now whereas yesterday they could ONLY borrow 500 mil. Sheesh.

The Japanese are playing this very well with manipulating thier currency to allow economic recovery and stockpiling at the same time. We should be so smart.

-- Gordon (g_gecko_69@hotmail.com), September 01, 1999.


GORDON: I too have begun to look forward to your updates. The demand relative to the available supply of crude is definitely up. Prices paid at both the wholesale and retail levels have risen. Here in Colorado we now see gasoline at the ~$1.35 level for 85 octane.

With respect,

-- Dave Walden (wprop@concentric.net), September 01, 1999.


Way to go, Gordon! A fresh voice from the pits!

Keep it coming, please.

-- jor-el (jor-el@krypton.uni), September 02, 1999.


Gordon,

Great info...keep it coming if and when you get it. It sounds like they really are getting concerned over there about the refining aspect as well they should. I understand their refineries are among the leaders in usage of embedded systems. I think I'd read somewhere else that they'd gotten a late start in oil remediation, but I'm not for certain on that... have you... or has anyone else reading this picked up any further info on Japanese oil industry/refining remediation. In general, it seems that Japan was behind the US by what, 6 months or was it more or less... I know at least 3 months but I was thinking more like 6 months to a year behind us in Preps.

-- R.C. (racambab@mailcity.com), September 02, 1999.



Thanks, Gordon. Always worthwhile reading.

Closer to home... Sitting here, waiting for the winter diesel blend so I can top off my own tank. Gettin a little nervous, hopin the big boys don't scarf it all.

Godspeed,

-- Pinkrock (aphotonboy@aol.com), September 02, 1999.


Most of the big boys have definite plans to scarf it. The local DEMA (subset of FEMA) where i am told us that along with the Nat. Guard they would in fact, confiscate tanker trucks for use at the generators that they had purchased for emergency generation if a fuel panic ensued. It was their belief that it would. We had to explain to them that the trucks don't have spigots on them, but they were already prepped for that with equip that would allow them to pump direct. Yikes. This was 5 months ago. I remember hearing it and thinking I was dreaming. Then I got real serious about Y2K preps.

-- Gordon (g_gecko_69@hotmail.com), September 02, 1999.

Gordon:

Are you waiting for winter diesel too? From what I have been told, it is a different product from the refinery, and they don't even start making it till about October. I really am getting a bit nervous about this, as biggie stockpiling could trigger supply problems anytime now. But I sure can't burn jelly in the winter in Colorado. Any ideas, Oh Crude Wizard?

Godspeed,

-- Pinkrock (aphotonboy@aol.com), September 03, 1999.


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