be careful how you read the headlines

nobull

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Crude inventories rose less than expected. You have to be a little bit careful how you read the headlines.

NEW YORK (Dow Jones)--U.S. crude inventories rose less than analysts' expectations last week, according to data released Thursday by the U.S. Department of Energy.

Crude oil stockpiles rose 822,000 barrels to 346.7 million barrels, below analysts' average forecast for an increase of 1.1 million barrels. The American Petroleum Institute, an industry group, reported a 163,000-barrel build in crude inventories in its weekly report released Wednesday.

Both sets of data were released a day late because of the Presidents Day holiday on Monday.

Crude oil futures added to earlier gains following the release of the DOE's report at 11 a.m. Light, sweet crude for April delivery is up $1.22, or 1.2%, at $99.32 a barrel on the New York Mercantile Exchange. Front-month March reformulated gasoline blendstock, or RBOB, recently traded up 4.45 cents, or 1.6%, at $2.7594 a gallon. March heating oil rose 3.02 cents, or 1%, at $2.9565 a gallon.

Overall stockpiles of crude oil and products remain above normal ranges seen this time of the year [Here is the key!!!!]

Gasoline stockpiles fell 2.8 million barrels to 238.3 million barrels, the department's Energy Information Administration said in its weekly report. Analysts expected an increase of 300,000 barrels, according to a Dow Jones Newswires survey of analysts.

Distillate stocks, which include heating oil and diesel fuel, declined 1.3 million barrels to 159.9 million barrels, compared with analysts' forecast for a draw of 1 million barrels.

Refining capacity utilization fell 1.8 percentage points to 79.4%. Analysts had expected runs to increase 0.4 percentage point.

API pegged refinery utilization at 78.1% last week, down 2.5 percentage points. The industry group reported that showed that stockpiles of gasoline fell 1.6 million barrels and distillates fell 534,000 barrels.



This is very interesting. It appears that oil inventories are growing but gasoline inventories are slowing due to reduced refinery utilization. Thus, the refiners expect this spike in oil prices to be temporary and will wait till oil drops to increase utilization. Once again this says it all. No shortages of supply, seasonally high inventories, on the highest stockpiles in 5 years, and no pickup in demand. The price of oil is pure speculation in the futures markets. The liberal gov. gave Globex the power to regulate itself so they have essentially done nothing. They need to crack down on margin rates for speculators. Until they do this the market will be driven by speculators free to create recession waves. It is very dangerous to allow speculators to control necessary commodities.

doug
 
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PLC1

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Crude inventories rose less than expected. You have to be a little bit careful how you read the headlines.

NEW YORK (Dow Jones)--U.S. crude inventories rose less than analysts' expectations last week, according to data released Thursday by the U.S. Department of Energy.

Crude oil stockpiles rose 822,000 barrels to 346.7 million barrels, below analysts' average forecast for an increase of 1.1 million barrels. The American Petroleum Institute, an industry group, reported a 163,000-barrel build in crude inventories in its weekly report released Wednesday.

Both sets of data were released a day late because of the Presidents Day holiday on Monday.

Crude oil futures added to earlier gains following the release of the DOE's report at 11 a.m. Light, sweet crude for April delivery is up $1.22, or 1.2%, at $99.32 a barrel on the New York Mercantile Exchange. Front-month March reformulated gasoline blendstock, or RBOB, recently traded up 4.45 cents, or 1.6%, at $2.7594 a gallon. March heating oil rose 3.02 cents, or 1%, at $2.9565 a gallon.

Overall stockpiles of crude oil and products remain above normal ranges seen this time of the year [Here is the key!!!!]

Gasoline stockpiles fell 2.8 million barrels to 238.3 million barrels, the department's Energy Information Administration said in its weekly report. Analysts expected an increase of 300,000 barrels, according to a Dow Jones Newswires survey of analysts.

Distillate stocks, which include heating oil and diesel fuel, declined 1.3 million barrels to 159.9 million barrels, compared with analysts' forecast for a draw of 1 million barrels.

Refining capacity utilization fell 1.8 percentage points to 79.4%. Analysts had expected runs to increase 0.4 percentage point.

API pegged refinery utilization at 78.1% last week, down 2.5 percentage points. The industry group reported that showed that stockpiles of gasoline fell 1.6 million barrels and distillates fell 534,000 barrels.



This is very interesting. It appears that oil inventories are growing but gasoline inventories are slowing due to reduced refinery utilization. Thus, the refiners expect this spike in oil prices to be temporary and will wait till oil drops to increase utilization. Once again this says it all. No shortages of supply, seasonally high inventories, on the highest stockpiles in 5 years, and no pickup in demand. The price of oil is pure speculation in the futures markets. The liberal gov. gave Globex the power to regulate itself so they have essentially done nothing. They need to crack down on margin rates for speculators. Until they do this the market will be driven by speculators free to create recession waves. It is very dangerous to allow speculators to control necessary commodities.

doug

Yes, allowing speculators to control necessary commodities is a sure formula for economic disaster, as the rising cost of petroleum prices despite increase in supply demonstrates. Good article.

But, I thought it was the conservatives who don't like government regulation. According to the above, it is the liberals who gave Globex the power to regulate itself.

Sometimes, this liberal vs conservative issue can be confusing.
 

GenSeneca

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Yes, allowing speculators to control necessary commodities is a sure formula for economic disaster, as the rising cost of petroleum prices despite increase in supply demonstrates. Good article.
I had a conversation with BigRob about removing oil from the futures market and thought I was alone... Not one person, that I can remember, spoke up to agree with me. Since then the idea seems to have become more mainstream, I've heard about it now in several news outlets and I'm glad to have once again been ahead of the curve on this issue.

But, I thought it was the conservatives who don't like government regulation.
I can't speak for conservatives but I'm a supporter of letting supply and demand decide prices on a free market. Also the idea that removing oil from the futures market is somehow "government regulation" has yet to be explained.

Meanwhile, the futures market is heavily regulated:

The CFTC's mission is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets. - Commodity Futures Trading Commission (CFTC)

Protection from market manipulation? FAIL

As stated, supply has actually increased where oil is concerned and demand has remained steady. On a free market where supply and demand determine price, oil prices should have remained steady or fallen. Instead, on our Government Regulated market, we have seen the price of oil skyrocket due purely to speculation being allowed to manipulate the price.
 

PLC1

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I had a conversation with BigRob about removing oil from the futures market and thought I was alone... Not one person, that I can remember, spoke up to agree with me. Since then the idea seems to have become more mainstream, I've heard about it now in several news outlets and I'm glad to have once again been ahead of the curve on this issue.


I can't speak for conservatives but I'm a supporter of letting supply and demand decide prices on a free market. Also the idea that removing oil from the futures market is somehow "government regulation" has yet to be explained.

Meanwhile, the futures market is heavily regulated:

The CFTC's mission is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets. - Commodity Futures Trading Commission (CFTC)

Protection from market manipulation? FAIL

As stated, supply has actually increased where oil is concerned and demand has remained steady. On a free market where supply and demand determine price, oil prices should have remained steady or fallen. Instead, on our Government Regulated market, we have seen the price of oil skyrocket due purely to speculation being allowed to manipulate the price.

yes, the protection from market manipulation was a fail, no question. Someone is making a pile of money on manipulating the petroleum market. Now, is that because the government over regulates the oil market, or because it fails to effectively regulate speculation on that market, or perhaps a little of both?
 

nobull

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402
Yes, allowing speculators to control necessary commodities is a sure formula for economic disaster, as the rising cost of petroleum prices despite increase in supply demonstrates. Good article.

But, I thought it was the conservatives who don't like government regulation. According to the above, it is the liberals who gave Globex the power to regulate itself.

Sometimes, this liberal vs conservative issue can be confusing.

I still say oil is the most valuable substance on earth and not really ultimately suitable for burning. I like electric cars for the masses but the gov energy policy is backwards that such progress there will be delayed. (yes I am a conservative)

Another development is the capacity to refine shale oil. It is more costly but it can now be done reasonably cheaply and we have lots of shale and high sulfur oil. Again gov policy should encourage this but it is in fact bucking it. Same with water extraction of natural gas.

The US is dead in the water like a barge with no engine. So the USA will continue to reduce consumption and China is not the major trader with all oil nations so they are cutting better deals away from the markets. So the market is not going anywhere.

The only reason for oil to charge ahead is as a hedge to inflation but here we expect oil to keep pace with the dollar not get out way in front of it. Since all oil deals are in dollars, the cheap dollars in the USA will make oil more expensive than it should be independent of demand.

I don't like so much speculator money in these commodities and my remedy for that is to simply to have SEC increase margin requirements on speculators and leave the producers and users alone. This would work on all bubbles including gold to keep the commodities from bubble formation.

Our founding fathers believed in private ownership of property and in limited government, but I don't see where it was written that there can not be a public interest that is served by the government intervening in certain transactions. Granted, they would turn over in their graves to know what a fascist, totalitarian state we have become, but that doesn't mean they would have been opposed to any and all government regulation/help of certain markets.

I think it's kind of ridiculous to think in terms of "rights" to an "open market," the way some free-market capitalists do. Does anyone seriously think that God is a free-market capitalist? I sure don't. I think it's crazy even to think that God believes in private ownership of property. That kind of thinking is motivated by the most mindless and shallow of political thinking (which, I suppose, is redundant) Hey, I believe in God, and I believe in capitalism, but I don't believe that God believes in capitalism - that's just too silly for words. There is no spiritual path that is predicated on private ownership of property.

So in sum:

1) cheap energy should be the US policy across the board all fuels: This is better than any stimulus. Make energy abundant and cheap. If you make electrical very cheap, electric cars will fill the roads.
2) 200 new nuclear power plants should be constructed and the gov needs to simplify the regulator and speed up the process. Other governments don't have situations like we have in the USA. There will not be an economic future without nuclear power.
3) raise the margin requirements on speculative commodities traders. Oil is the most useful substance on earth. So if the price goes way up and human behavior has to adjust, We have problems... ]


just sayin
doug
 
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