Agreed, obviously the market is very volatile right now. However, I think that the market has tested its bottom for the near-term and will struggle to fall below $55-$56/barrel. Another expected poor inventory report on Wednesday will likely support prices, IMO.
poor inventory of light sweet crude??? gasoline?? heating oil?? everything i heard as of a week ago was that inventories were at high points...and demand was weak.
Just a quick paragraph from an oil source . . . Huge Commercial Stock Draw The largest weekly commercial stock draw of the year occurred last week when 11.3 million barrels were drawn from inventory. Unlike last year’s large October stock build of 21 million barrels, as the U.S. was recovering from massive hurricane damage, so far this October commercial inventories have declined 17 million barrels. The year-on-year adjusted inventory excess has gone from 76 million barrels on September 29th to 49 million barrels as of October 20th. At 49 million barrels, commercial stocks are 4.8% above last year, while total U.S. oil demand is up 4.1% over the last four weeks versus the year earlier. Oil demand excluding extraordinarily weak residual fuel oil, which is reportedly down 46% versus the year earlier, is up 6.7% or 1.3 MMB/D over the last four weeks. Consequently, days supply forward inventory cover for all oil products excluding residual fuel oil are actually below year ago levels. This is quite remarkable and, of course, is because of very strong U.S. oil demand compared to last year’s depressed levels. The chart shown relies on last year’s corresponding four-week average demand (excluding residual fuel oil) as reported in 2005, while the 6.7% demand growth cited earlier in this paragraph is based on the current four-week demand versus last year’s adjusted level based on the final data which was revised downward. Hence, current days supply forward cover in the chart is not shown to be below last year but it would be if adjusted for the fact that 2005 demand was actually lower. Next Week Another Inventory Decline Is Forecast For the four major oils forecasts each week, another significant inventory decline is expected in next week’s DOE report. Compared to last year’s 3.5 million barrel inventory increase, a stock decline of 3.4 million barrels is forecast for next week. All three of the major light products are predicted to show declines, while crude oil stocks build.
wow..thanks for posting that. i'm amazed at how quickly we go from hearing we're oversupplied to undersupplied...and frankly, it makes me doubt it all. i still think the price of oil is too high. i could certainly see it settling at $55 instead of $50...but i don't see it moving back up around the mid-$60's again anytime soon.
Keep in mind that the primary reason for the change in inventories is a very high refinery maintenance schedule which causes refineries to have downtime and therefore requires the market to draw on inventories to keep itself supplied. This was the primary point I was trying to make a few weeks ago about how the market would change in the near future. The huge question remains though about winter weather b/c it not only affects heating oil demand, but it also affects natural gas prices, which impacts residual fuel demand. (The reason resid demand is so much lower than last year is b/c natural gas has been cheaper this year and power stations use resid or natural gas interchangebly based on pricing.) Should be interesting . . .
and i've seen reports that your natural gas prices will absolutely, positively be lower this year than last year. from centerpoint reps.
Looks like supplies are fine: http://www.chron.com/disp/story.mpl/ap/business/4297714.html Oil prices slip by more than $2 a barrel By BRAD FOSS AP Business Writer © 2006 The Associated Press WASHINGTON — Oil prices fell by more than $2 a barrel Monday and heating oil futures plunged to a 15-month low as traders looked ahead to mild weather in the U.S. and supply data due out later this week that is expected to show rising inventories of crude. Doubts about OPEC's ability to implement a 1.2 million barrels a day production cut also weighed on prices. Last week, oil prices surged by $2 a barrel after Energy Department data showed a large decline in U.S. crude-oil inventories. But some analysts believe the market overreacted to the data by failing to account for the impact of a brief shutdown of the Louisiana Offshore Oil Port, through which 10 percent of all U.S. oil imports flow. "Everybody expects a correction this week," said Antoine Halff, an analyst at Fimat USA in New York who warned of the market's misinterpretation of the data in a report last week. Mild autumn weather along the East Coast helped ease prices. Accuweather.com said a high pressure system on Tuesday "will bring warm air flowing through the Southeast and into the Mid-Atlantic States. Afternoon highs will climb into the 70s." Light sweet crude for December delivery fell $2.39 to settle at $58.36 a barrel on the New York Mercantile Exchange, where gasoline futures tumbled by 10.44 cents to settle at $1.4555 a gallon and heating oil futures declined by 9.29 cents to settle at $1.6015 a gallon. It was the lowest settlement price for front-month heating oil futures since late July 2005. In London, Brent crude fell by $2.40 to settle at $58.68 a barrel on the ICE Futures exchange. Oil traders are watching to see how quickly the 11 members of the Organization of Petroleum Exporting Countries move to cut production after announcing that as a group they would reduce output by 1.2 million barrels day. "Saudi Arabia, the United Arab Emirates and Iran have told some of their customers that they will cut production in coming months," said Victor Shum, an energy analyst at Purvin & Gertz in Singapore. But this hasn't had much impact on prices "because the market already priced in some output cuts from OPEC," he said. In its daily energy report, Vienna's PVM Oil Associates suggested that the market may not be convinced all the production cuts would be enacted, noting that "data for October ... reportedly showed that OPEC output in fact increased slightly to 30.18 million barrels per day from September levels." Peter Lengyel of PVM speculated that Monday's slide could be nothing more than a correction after "a relatively sharp increase of almost 7 percent" last week. "What is going to affect pricing in the coming weeks will really depend on how cold it gets in the Northern Hemisphere winter and the broader global economic outlook," said Shum. In other Nymex trading, natural gas futures declined by 41.1 cents to settle at $7.416 per 1,000 cubic feet.
Crude inventories up. Price dropping and refiners are still boosting production. http://www.chron.com/disp/story.mpl/headline/biz/4302708.html Oil prices drop after rise in crude inventories Associated Press NEW YORK — Oil prices fell today after the U.S. government reported that crude oil inventories climbed last week. Heating oil and gasoline inventories fell, as expected, but the report indicated that refiners are boosting production. Light sweet crude for December delivery fell 70 cents to $58.03 a barrel in morning trading on the New York Mercantile Exchange. Heating oil futures fell 2.4 cents to $1.6430 a gallon. Gasoline futures rose less than a cent to $1.4350 a gallon. According to the U.S. Energy Information Administration's weekly report today, U.S. crude oil inventories rose by 2 million barrels to 334.3 million barrels in the last week. That was largely due to crude imports bouncing back up by 599,000 barrels per day from the previous week, when imports dropped off significantly. Inventories of distillates, which include heating oil and diesel fuel, fell by 2.7 million barrels to 141.3 million barrels. Gasoline inventories fell by 2.8 million barrels to 204.6 million barrels. But refineries operated at nearly 89 percent capacity, up more than 2 percent from the previous week — showing that refiners can boost production going forward, said Peter Beutel of Cameron Hanover. Phil Flynn, analyst at Alaron Trading Corp., said prices are also dropping due to this week's soft U.S. economic data — such as the Institute for Supply Management's manufucturing index, which on Wednesday indicated that growth is at its slowest pace in three years. Soft economic data suggests weakening demand, which causes energy prices to fall. A Dow Jones Newswires survey of analysts forecast crude stocks would rise 2.5 million barrels, while distillate inventories were expected to fall by 1.3 million barrels. The survey also forecast a 1.1 million barrel draw in gasoline stocks. On Monday, crude-oil futures declined by more than $2 a barrel amid mild weather on the East Coast. "The market has no real headlines to drive it, and the weather forecast for the Northern Hemisphere winter is on the warm side," which will keep prices around $57-$58 a barrel, said Victor Shum, an energy analyst at Purvin & Gertz in Singapore. A sudden cold snap, however, would bump up fuel demand and prompt a price spike, he said.
Yeah, I was surprised to see oil fall as much as it did after the announcement. I assumed it would remain flat. LOOP closures definitely can affect the numbers since just one VLCC (very large crude carrier) being delayed or arriving early will cause a 2 million barrel swing just by itself. Welcome to my world, I'm actually in the shipping business not the oil business.
This thread keeps taking me back to the days when I worked for a consulting company to the energy traders market. I never thought I would see a thread discuss EIA and API inventory numbers. Note to all those refiners out there, don't run a tanker full of Zaireian crude through your refinery without first testing the crude. You might just blow up your refinery.
That just makes me think about when I had to drive from Colorado to Houston in my friend's Tahoe the week after Hurricane Katrina and gas prices spiked. Pretty much the worst week ever and worst automobile ever for a long drive . . .
i cant remember did you in another thread or this one predict that gas would drop to a specific price? and also i paid 1.92 the other day in bastrop. going down down down.
back in the summer i said it would be below $2 by christmas. at that point is was selling for around $3/gallon. everyone thought i was crazy. it's one of the few things i've ever been right about.
Contrast that with the experts' opinion last winter that it would be trading at $100/gal. by Christmas. Great call on your part.
it was all built on crap. fears that never came to fruition. there was so much irrational fear built into the price. all markets work in cycles. there are some who want to believe that cycles don't happen in the oil market. but we've seen this all before. we've seen it crash hard after peaking like crazy. we've especially seen the effects of all this in houston. it's down about $.75 today.
yeah. it's funny, because oil actually went up on the london market...that was the news leading in to the day. they were waiting on some reports about inventories that they thought would drive the price up. i have no idea what really happened, though.
