chinton re: Crude being turned away....
No, this occured a couple weeks ago... due to excess inventories.
Jet Fuel inventories are at 10 year highs in Europe.
We all know that US Crude Oil and Natural Gas inventories are at the upper bands of the last 5 years and this was achieved simultaneous to re-filling the USA's SPR.
Everyone from Lee Raymond at XOM, to Lord Browne of BP, to VLO's CEO have told us that THERE IS NO SHORTAGE OF CRUDE OIL ANY WHERE IN THE WORLD - period.
Inventory levels show a complete disconnect to price.
The Futures Markets have used everything from an industrial accident with Thunderhorse, to Hurricane's that didn't hit, to Refinery outages that always occur, to the non-event of the Death of the Saudi King, to Goldman Sach's THE WORLDS LARGEST ENERGY DERIVATIVES TRADER's - call for $105 Oil - just as inventory fundamentals had corrected Crude back down to the mid $40's.... to now the closing of US Embassy facilities in Saudi Arabia as reasons why Crude Prices are where they are.
When Crude Futures has money come in from the Carribean that mysteriously keeps putting a "floor" under Oil on each fundamentally supported pullback...and Oil Traders with decades of experience just shake their heads and privately talk about this not being an "internal" market driven event...people ought to start paying attention.
No different than when mysterious money comes in from the Carribean and supports our US Treasury Auctions in the abscence of Foreign CB's.
Global Inventory's have risen and in many cases are at historic highs - all directly into Prices nearly Tripling ?
... I think that meet's even the most critical definition of "disconnect"
Matt Simmons with his latest off the Wall call for a 5-10 fold increase in Crude Oil prices in Q4... has assured the complete and total destruction of his Professional Credibility...in a matter of months.
The Saudi's have told us - there are no customers for any more Crude Oil ? There is simply no one willing to take on any more shipments of Oil and inventory levels in many cases are near record levels ?
...doesn't make sense.
Europe's economy is rolling over... and as just recently acknowledged by Greenspan for the first time, Oil Prices are NOW having a negative effect upon the US Economy.
Foreclosures in the Midwest are up +33% year over year.
THAT is an off the chart - warning signal.
There has been no Housing Bubble in the Midwest.
That Stat is not from collapsing Housing Prices... it is from a consumer that has no job growth, no wage growth and no savings that is getting hit by higher gasoline prices, higher heating & cooling bills, higher property taxes, higher food costs (but, yet NO INFLATION (VBG)...all atop a historic reflation of the Economy by the Fed that has destroyed the purchasing power of the US Dollar and a Debt and Credit Bubble of unprecedented levels that alone - is responsible for fueling the recovery of the post 911 US Economy.
Strong Economies are built by strong Job and Income Growth and reinvested Savings - all NON-existant today... not by debt and credit.
The Midwest has already hit the wall... it starts in flyover country and will spread outward.
The Cure for High Oil Prices - will be High Oil Prices.
While the Bush/Cheney pOILitic's Energy DEPENDANCE Bill anchored us further to dependancey on an Oil based Economy and gave Big Oil a windfall without any requirement to expand Refining Capacity etc... the Market will always introduce incremental substitution, new and alternative Energy Sources and people will simply buy and use less at higher prices.
A BAD MARCO US, or Global Economy has ALWAYS trumped Good Oilpatch Micro fundamentals.... it will be no different here.
The Story in China is completely misrepresented....their inherent economic inefficiencies in utilizing Natural Resources verus more efficient economies like the US, Japan, or even India... is creating stress fractures in China's System.
...and not by accident...vis a vis those same Economic Inefficiencies being used to collapse the Soviet Union.
The US is pushing Crude to higher and higher price plateau's... letting prices settle in... then trying to spin to the Markets that the US Economy is humming along just fine and these higher Oil Prices are no problem relative improved GDP per BOE ratio's etc.
It' not... it's a dangerous game in a time in which Global Markets have been more manipulated and intervened upon than any time in history...and with Derivatives now at levels exponential to what existed at the time of the LTCM crisis... with Paradigm Shifts occuring in Global Currencies, with Global Geopolitical Tensions high...and the Western Economies propped up via an unprecedented Debt & Credit Bubble... it's a most dangerous game...
The Republicans are going to have to find a conventient "crisis" in which to blame the coming Economic Abyss upon...when they face re-election in 2008.
I don't think they'll have much luck in trying to sell US Voters on - "blame it on the Oil Crisis" ... nor, will hanging their hat upon the US Voters being unlikely to change leadership midstream if we conveniently find ourselves at War with IRAN...
Dangerous games... dangerous times.
Giant Multi-layered House of Cards when they collapse - fall mainly in only one direction....
Plan & position accordingly,
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