Besides crude oil
Hi Bob
at least from what I understand - they (the speculators)- don't intend at all to take delivery but as you pointed out the "rules" call for taking delivery.
So the question:
how do the speculators manage this issue (taking delivery according to "the rules"); eventually it would require dumping/parking it (the crude)?
(or are the speculators dealing with crude that does not even exist?)
Oil inventories are up, but what about storage capacity.
How much commercial storage capacity is available - what's the cost per barrel?
From a business point of view refineries as well as the petrochemical industry should have limited storage capacity (it's working capital) and from business/operational point of view one should minimize inventories to minimum - unless they try to profit from windfall;
I hope the strategic oil reserve does not provide a "relief valve"/loop hole for speculators (supposedly there is plenty of capacity left in the salt caverns - strategic reserves continue to grow/bloat).
My point: if speculators would know there is no way to dump the oil it would be far more risky to play with oil futures.
From what I can see it's not OPEC controlling the price; the culprit is right in the backyard of the US.
Somebody (I won't mention a name) needs to make it very clear to parties involved in bidding up crude in speculative way that it is NOT in the interest of the US.
On the other side high price for energy is a way to spur looking at alternatives - but drilling in Alaska is only a temporary fix.
Don't mess with Texas BUT don't mess with oil either
Oil Falls to Six-Week Low After IEA Cuts Global Demand Forecast
April 13 (Bloomberg) -- Crude oil fell to a six-week low in New York, the seventh drop in eight days, after the International Energy Agency cut its forecast for world fuel consumption.
The agency yesterday trimmed its estimate of demand in 2005 for the first time in four months, as oil use grows at a slower rate in China, the world's second-largest consumer. Rising OPEC output and higher world inventories may help lower prices, the Paris-based group said. Oil has fallen 7.3 percent in April.
``The fundamentals of world demand are beginning to catch up to the market,' said Alan Herbst, a principal at New York-based Utilis Energy LLC, an energy adviser. ``Chinese demand has a significant psychological impact on traders.'
Crude oil for May delivery fell as much as 66 cents, or 1.3 percent, to $51.20 a barrel in electronic after-hours trading on the New York Mercantile Exchange, the lowest intraday price since March 1. It traded at $51.37 at 1:42 p.m. Singapore time.
Yesterday, the May contract fell $1.85, or 3.4 percent, to $51.86, the biggest one-day decline in almost three weeks. Prices had climbed as high as $54.05 before the IEA report release.
World oil consumption will average 84.27 million barrels a day in 2005, 2.1 percent more than a year earlier, the IEA said yesterday. The new forecast is 50,000 barrels a day less than the agency's estimate last month.
Chinese demand growth slowed to an annual rate of 5.4 percent in the first two months, down from 21 percent a year earlier, the IEA said.
Chinese demand growth is ``unlikely' to match the rate of increases seen in the first half of last year, the IEA said, citing reduced diesel imports in January and February.
`Price Frenzy'
Rising inventories may ease the ``current price frenzy' that sent oil to a record, U.S. Federal Reserve Chairman Alan Greenspan said on April 5, according to the text of a speech delivered via satellite to the National Petrochemical and Refiners Association in San Antonio.
Oil has also fallen on concern the U.S. Federal Reserve will accelerate the pace of U.S. interest rate increases, slowing global economic growth and demand for fuel.
``Falling demand is likely a combination of high prices and a coordinated effort on the part of the Federal Reserve and Chinese officials to slow their respective economies,' said Mike Armbruster, co-founder of Altavest Worldwide Trading Inc. in Laguna Hills, California.
New York oil futures are 12 percent below the record $58.28 reached on April 4.
``Crude oil at $55 and $60 a barrel is predicated on spectacular demand forecasts,' said John Kilduff, senior vice president of energy risk management with Fimat USA Inc. in New York. ``This could be the beginning of a number of downward revisions as high energy prices do their damage to the economy and demand growth.'
Inventories
Oil fell last week when an Energy Department report showed U.S. crude oil inventories gained 2.4 million barrels in the week ended April 1. The stockpile, at 317.1 million barrels, was at its highest since June 28, 2002.
``I wouldn't be surprised to see this trend continue,' said Utilis Energy's Herbst in an e-mail. ``The U.S. is entering driving season so majors, refiners should be building crude oil inventories.'
The Energy Department's latest report will probably show stockpiles gained another 300,000 barrels in the week ended April 8, according to the median forecast from a Bloomberg survey of 15 analysts. Nine of the analysts expected an increase in inventories and six said they fell.
About 10 percent of the world's oil is used to make gasoline for U.S. motorists. Their demand usually peaks between the Memorial Day holiday late May and Labor Day early September.
Gasoline
U.S. gasoline inventories last week were probably unchanged at 212.3 million barrels, according to the analyst survey. Supplies the week before were 5.7 percent higher than a year earlier, according to Energy Department data. The department will release its report at 10:30 a.m. Washington time.
The Organization of Petroleum Exporting Countries last week resumed talks on a second 500,000-barrel a day increase in its production quota to help swell global supplies.
OPEC, which pumps about 40 percent of the world's oil, raised its quota ceiling by 500,000 barrels on March 16 to help lower prices and swell global stockpiles before the fourth quarter when demand is forecast to peak.
World oil consumption averaged 84.6 million barrels a day in the first-quarter, the IEA said. That will fall to 82.7 million in the second quarter before rising to 86.1 million barrels a day by the end of the year.
Oil stockpiles held in Organization for Economic Development and Cooperation countries were enough to meet 52 days of demand in February, up from 51 days the month before, the IEA said.
To contact the reporters on this story:
Sri Jegarajah in Singapore at sjegarajah@bloomberg.net; Gavin Evans in Wellington, New Zealand
at gavinevans@bloomberg.net.
To contact the editor responsible for this story:
Reinie Booysen at rbooysen@bloomberg.net. |
