The Oil Drum

38 comments on This Week in Petroleum 9-26-07

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mencial on September 26, 2007 - 6:20pm

True. And (by looking at the graph) there seems to be a drawdown on the stocks in a month or two, of about 5M. That will get the stocks very, very close to the 185M level... I remember hearing around here that that was the minimum possible stock level.

I guess we might be testing that fact before long.

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CLZ09 on September 26, 2007 - 10:47pm

One interesting thing about the recent http://futures.tradingcharts.com/chart/CO/B7 > price action in crude oil is that it would appear to be being driven by strong fundamental factors. Over the past month, crude oil has pushed higher steadily day by day. This isn't action driven by news or rumors with surges and pull backs, this is unidirectional and with a purpose. It suggests that something is changing in the underlying supply and demand dynamics and that this surge could take us to $100 and beyond.

Tea leaves? Perhaps, but these markets are driven by the commercials and they have their finger on the pulse of supply and demand.

Julian Darley has http://globalpublicmedia.com/chris_skrebowski_on_record_high_oil_price > interviewed Chris Skrewbowski on the current supply demand situation over at Global Public Media and his conclusion is that there probably won't be enough supply to meet the increased demand of the northern hemisphere winter.

Something will turn the Excursion drivers into Prius owners and my guess is it won't be our telling them hybrids are good for the planet!

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pschwart on September 27, 2007 - 8:17am

IMO, supply and demand figures are becoming less meaningful. As more ME oil is pulled off the futures markets and sold through contracts in non-US dollars, more activity in dollars will be driven to the dollar based hubs.

It was reported last week that Shell bought more Omani hub based UAE oil than is actually produced there. Why? Probably because that's the only place they can get it. Now the banks are going to have to find the oil to fill the orders or sell their contracts at a loss.

People seem to forget that the Oman and Brent Hubs are skeletons of what they once were. Saudi Arabia is clearly not selling much oil there.

This is a weak dollar phenominon. The problem is few analysts can see pricing in three demensions, supply, demand and currency exchange.