U.S. oil inventories fall to a 22-year low
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Why are U.S. oil inventories at a 22-year low?
oil, private credit, and elk antlers. Seriously. From American Public Media, this is MarketPlanet.
In Los Angeles, I'm Kyle Rizdahl. It is Thursday today, the fourth day of June. Good as always to have you along, everybody. Here's a little choose-your-own-adventure as we get started. Today, according to AAA, regular gas right now, this is a national average, is $4.24 a gallon. That is, depending on which adventure you choose, either down more than 18 cents from a week ago... and or nearly $1.10 more than we were paying a year ago.
How is U.S. oil export affecting domestic prices?
We all know why, I imagine, but the ramifications aren't always clear. The United States is exporting more of the oil that is produced here to make up for some of that missing Persian Gulf supply, because it's a global market, right? But that, in turn, has helped convince the Trump administration to draw down the Strategic Petroleum Reserve to try to keep prices down. Thing is, the Energy Information Administration said this week, U.S. petroleum inventories are now as low as they have been since 2004. Marketplace's Kelly Wells gets us going with what that might mean.
The U.S. is exporting more oil, but not because it's producing more oil.
We're just kind of pulling that out of our inventory and we're, you know, we're shipping it overseas.
Abhi Rajendran with the Center for Energy Studies at the Baker Institute says exports from the U.S.
What challenges does the U.S. face with oil supply?
have tempered the global supply shortage and actually kept prices relatively stable.
But the U.S. can't continue to be backstopped just through inventories for too much longer.
At this rate, analysts expect U.S. inventories to reach record lows because last time they got this low in the mid-2000s, the U.S. wasn't even close to exporting the millions of daily oil barrels it does now.
It's really easy to say, well, we can just stop that. Well, we really can't.
Patrick DeHaan, head of petroleum analysis at GasBuddy, says if we did stop exporting, oil companies would pretty much stop drilling.
You can't have a world in which the U.S. is the world's largest oil producer and we keep all of our own oil. It just wouldn't work like that. There's not enough financial incentive for oil companies to invest billions of dollars for a very limited return.
Even if the Strait of Hormuz were to open today, the U.S. would likely keep drawing down its stockpiles for months. Greg Priddy, senior fellow with the Center for the National Interest, says for one thing, oil tankers are slow and a lot of them are in the wrong place.
They're not sitting there waiting in the Arabian Sea to go in and pick a cargo up. A lot of them are parked near the destinations or tankers that would have been going to the Gulf just picked up a cargo in Texas.
And if the war keeps going until the end of the year?
It's conventional wisdom, even, that the U.S.
What is the current state of private credit markets?
would be in a recession.
Priddy says it's likely that U.S. drivers will pay $5 per gallon by July. And if the war continues, it could be $6 by the end of the summer. I'm Kaylee Wells for Marketplace.
Today's installment of what could possibly go wrong in this economy is brought to us by the private credit markets. Blackstone's private credit fund is capping what private credit investors can withdraw at 5%. They'd been asking for 10. Other private equity firms doing the same, Partners Group and Cliffwater? Marketplace's Sabri Beneshour has more on what's eating those investors and a very quick refresher on what private credit is in the first place.
After the great financial crisis of the late aughts, interest rates were really low for a long time. And so investors were like, well, this sucks. How are we going to make money? So they started snooping around for good places to put their wealth.
There is generally big inflow of money into alternative space.
Victoria Ivashina is a professor at Harvard Business School. A lot of investors realized, let's just do what banks do. Let's lend money to businesses, but like new kinds of businesses, like software that banks are afraid of.
Traditional debt markets were not providing those forms of financing.
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Chapters
8 chapters
1
Why are U.S. oil inventories at a 22-year low?
0:02–0:51
2
How is U.S. oil export affecting domestic prices?
0:51–1:42
3
What challenges does the U.S. face with oil supply?
1:42–3:01
4
What is the current state of private credit markets?
3:01–4:21
5
How are investors reacting to private credit withdrawals?
4:21–7:15
6
What role does social media play in advertising today?
7:15–8:22
7
How do stealth ads influence consumer behavior?
8:22–10:36
8
What unique market exists for elk antlers in Jackson Hole?
10:36–26:08