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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: ild who wrote (22752)12/2/2004 1:19:28 PM
From: mishedlo   of 110194
 
ILD, I am curious as to what opinion Heinz thinks is reasonable. Saudi selling from its own reserves perhaps?
Any way to track that down? Normally it is obvious as to what he is responding to but in this case I do not know.
Thanks
Mish
--------------------------------------------
Heinz on oil and gold
Date: Thu Dec 02 2004 12:35
trotsky (Aurum@China aviation) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
this sounds actually quite reasonable. i say this because speculators actually were not net long crude anymore, so a liquidation of spec longs ( as suggested on the ever helpful CNBS ) is not really a credible explanation for the drop.
that said, the relatively mild weather certainly has helped with distillate inventories, plus we have an inventory build in crude related to the tax treatment of such inventories ( i.e. it should disappear come January ) .
Saudi Arabia's actual output appears to have been well below the promised volumes over the past quarter ( plus it's mostly heavy sour that no-one wants anyway ) , and some have suggested that they're actually unable to boost output, but have instead been selling crude from their own storage. if that's true, then this drop is likely a fake-out.
of course, eventually the coming global slowdown should crimp demand growth.
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