JimL - I basically ditto Archi's statement.
While we wait to find out, the following data might interest you:
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quote.bloomberg.com
Inventories of heating oil in the U.S. are 39 percent below last year with peak demand just three months away, according to the American Petroleum Institute. Crude supplies stand at their lowest since 1976, the API said last week, and a survey after the U.S. market closes today may show a further drop, traders said.
Crude Oil(NYM)(Access) Sep 31.90 32.70 31.90 32.54 +0.60 8/15/00 4:59 32.56 32.51
Crude Oil(NYM)(Access) Oct 31.10 31.72 31.02 31.56 +0.48 8/15/00 4:59 31.95 31.55
Heating Oil(NYM)(Access) Sep 87.30 89.20 87.30 89.20 +1.86 8/15/00 5:00 89.20 88.15
Unleaded Gas(NYM)(Access) Sep 92.30 93.25 92.00 93.25 +1.23 8/15/00 4:56 93.95 92.85
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Crude and HO hit new contract highs, basis Sept., yesterday. Gasoline in approaching a contract high.
One thing I will say, is that over a month ago I did some calculations based on seasonal patterns and needed refinery run rates. They showed that 9 - 10 million barrel crude draws were probable. What was really interesting was that they showed the possibility for more than just one big draw. What surprised me, is that they came later than expected. I don't really know what comes next. I can only make educated guesses. One thing we know for sure now, is why the Saudi's decided to increase production. Can you even imagine the predicament we'd be in now if they didn't? The current situation is so tight that any significant loss of production (no matter what the cause) could create severe price spikes.
The strongest chart in the energy complex these days is HO. The US still needs to refine one hell of a lot of crude into HO. That's for sure! That indicates to me this is still a "product driven" rally in the oil complex. The seasonal trends dictate a build in crude will not begin until mid to late Sept. so we may continue to see slight draws until then. I expect refineries will begin to shift heavily over to HO production soon. If a previous poster was correct about the loss of Columbian crude, then coupling that fact, with the decline in Indonesian and Nigerian crude, the "oil on the water" may not distort the seasonal trends at all. Maybe it's a net wash?
Something to think about, maybe?
Bull
PS That Saudi crude better be on the water or the crude markets will be eating a giant doody sandwich, and we'll all have to take a bite. ;o} |
