<DrumBeat: September 19, 2006 The Oil Drum DrumBeat: September 20, 2006>

140 comments on The Forest and the Trees -- the Oil News Imbalance

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khaos3 on September 19, 2006 - 3:37pm Permalink | Subthread | Parent | Comments top
WestTexas,

"With world production down, world demand still going up" and US inventories high are we drawing down inventories from other parts of the world?

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westexas on September 19, 2006 - 4:20pm Permalink | Subthread | Parent | Comments top
Cry Wolf has a note down the thread about year over year declines in oil consumption in India.   I suspect that we are seeing similar declines in consumption in other poor and developing countries.
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khaos3 on September 19, 2006 - 4:36pm Permalink | Subthread | Parent | Comments top
I have some anecdotal evidence demand is in decline in my neck of the woods. My mate's father is a truck driver. He tells me traffic is very light. He has judged how well the economy is doing very accurately by this in the past. I have a friend in Maryland who drives up here every summer. He told me this summer he saw the lightest traffic in many years. But this is Maine, a poor state, and may not reflect what is going on in a place like NJ.
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fireangel on September 19, 2006 - 7:34pm Permalink | Subthread | Parent | Comments top
I suspect that is due to fuel switching. Being from India I know that it is highly likely. Alsdo when the bombay platform caught fire inventories were drawn down upon which werent replaced. I dont think BP has the first damn clue how to account for this. With India GDP growing at 8% and population at 2-2.5% there is no way consumption can decrease. That would imply an increase in energy efficiency of over 12% in a year. Well if thats possible then we are all wasting our time at the oil drum.
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jkissing on September 19, 2006 - 4:22pm Permalink | Subthread | Parent | Comments top
OECD oil stocks (which includes the US) are at a ten year low even as consumption is at a ten-year high, with overall coverage declining one day from last year per eia.  And, US stocks are the same as last year, not up as widely reported, when 12mmb unpaid loans from the US spr is considered.
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khaos3 on September 19, 2006 - 4:47pm Permalink | Subthread | Parent | Comments top
Thanks jkissing, I was fooled by the reported US inventory numbers. The market is certainly saying demand is going to decline from these levels; unless futures currently reflect just a bunch of traders / portfolio managers all trying to bail out of long futures at the same time to protect this years bonuses. A $5 billion hedge fund loss is a great way to get momentum going.
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jkissing on September 19, 2006 - 11:11pm Permalink | Subthread | Parent | Comments top
Actually, I think most hedge funds have been short for a couple of months, riding the oscillation around teh three year trend line. However, maybe because other commodities are weak, I think others jumped on as it hit the lower portion of teh band, around 68, so far pushing it down another 8%.  At some point those refiners that have allowed stocks to decline will begin buying, and at this point i expect a lot of short positions to reverse. ANd, China imports of crude plus products are up a combined 17%, and they have reportedly been waiting for low prices to fill their new SPR.  Meanwhile, we are in the shoulder season, and distillate demand is down more than normal because of very cheap ng being burned at those utilities that can switch back and forth.  Where she stops, nobody knows. Personally, I just stay fully invested and ride out the dips.
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khaos3 on September 20, 2006 - 4:20am Permalink | Subthread | Parent | Comments top
It seems there are triggers which have set everyone piling on in one direction. With tremendous short positions we are set for a strong reversal if we get the right event as a new trigger. Perilous business trying to predict short term prices. I prefer your strategy of sticking with long term conviction.  
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140 comments on The Forest and the Trees -- the Oil News Imbalance

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