While the market positions itself for a recovery, oil and fuel continue to pile up in storage. U.S. oil inventories have increased for three consecutive weeks, and are nearly 20% above last year's levels, the Department of Energy said Wednesday in its weekly inventory report.
Gasoline demand fell 2.7% last week, and was at its lowest point for the week since 2001, the department's Energy Information Administration said.
"The [oil] market shrugged off a bearish [inventory] report and traded more as a financial asset instead of an actual industrial commodity," said Stephen Schork, editor of the energy newsletter The Schork Report.
The world's storage terminals have been overwhelmed with unwanted oil and fuel for months, but this week's data pointed to an even bigger and persistent glut than many in the oil market had anticipated. Although U.S. refiners cut back a full percentage point on crude processing, distillate inventories, including heating oil and diesel, rose by more than analysts expected, while gasoline stockpiles fell by less than the average forecast in a Dow Jones survey.
Distillates inventories are at the highest level for the week since 1982 as the recession has cut demand for the fuel, which is commonly used in shipping goods around the world.
- Brewskie
Gluts everywhere of oil and gas--but prices rising on the NYMEX. Something is rigged o the NYMEX. I just know it. I feel it in my bones, and I know I am right.
ReplyDeleteI sure hope there are some tough, smarties at the CFTC.--Beano
There are speculators that are bound and determined to generate a "bounce" in oil prices to generate a "wave" of price increases that in turn can be capitalized on.
ReplyDeleteThese speculators most definitely see oil as a financial instrument to be manipulated for profit. Perhaps, getting burned, again, is what is needed to finally disabuse them of this notion.
There are no shortages and OPEC is holding back production to boot.
I don't want to see a collapse of prices, but an attempt to generate a "bounce" when supplies don't warrant a price rise, often leads to the opposite result of what was intended (see last year's price collapse).
Anaconda
How can this be? They are posting over at the Peakoil forums that the EIA has a new report out showing 'definative' proof that oil peaked in 2005. But in their defense they put up a story in the news section where an economic prognosticator is touting sub $10/barrel oil.
ReplyDeleteAnyway just wanted to give Brewskie a huge shout out for maintaining this excellent blog. I check it daily.
Benjamin "Beano,"
ReplyDeleteHow long can one nix the gravity of supply and demand?
Anaconda,
Surprising to hear you don't want to see prices collapse. Actually, I've taken the price increase in stride to see the positive: it spurns people's interest in developing advanced energy technologies, plus, it encourages oil companies to search for and extract "difficult" oil - i.e., deepwater deposits. ’Sides, this is hardly expensive oil. Anyway, if economic history is any lesson, speculative bubbles never last...
Anon,
Good to have you on board. There's still trolls out there who think oil peaked in 2005? Not surprising, that's why their a lunatic fringe. Anyway, hate to burst their bubble, but... 2008 beat the so-called 2005 peak; plus if OPEC hadn't cut back production late last year, 2008's production would have absolutely drilled that of 2005.