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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: B O Trust who wrote (65877)	9/7/2006 3:02:12 PM
From: B O Trust	Read Replies (1) \| Respond to of 206099

OECD “days of supply” is near all-time low! It's Belly-Button-Staring when market only taking US Oil inventories into account. The rest of the world exist out there too. This weeks Raymond James Weekly: 1) While U.S. oil inventories have risen on an absolute basis, they remain below 10-year highs and at the lower half of the 10-year range on a “days of supply” basis. 2) Most of the recent inventory builds have occurred in the U.S. market, as opposed to the rest of the world. Energy Agency (IEA) data for the Organization for Economic Cooperation and Development (OECD) countries, suggest that absolute global oil inventories are closer to the tenyear average and global “days of supply” of oil are at the low end of the 10-year range. Based on these points, we conclude that the recent U.S. oil inventory builds do not support a bearish stance on global oil prices. The following gives a few more details: Inventory builds have been primarily focused on the U.S. market... ...But total OECD inventories have only posted a slight build. Even though year-over-year U.S. oil inventories are up by about 40 million barrels (or 4%) as of last week, OECD inventories have only risen by 39 MMBbls (or 1.5%) over the prior year as of June 30. The story is similar over the past six months. Since April, U.S. inventories are up 65 MMBbls (or 6.5%) while first to the second quarter total OECD inventories increased by 67.4 MMBbls (or 2.6%). That means that U.S. oil inventory builds have accounted for 76% of the year-over-year increase through the end of June and 68% of the first to second quarter increase. This puts total OECD inventories at 2,664 MMBbls at the end of June, which is slightly above the 10-year average. ...OECD “days of supply” is near all-time low! Perhaps even more importantly, total OECD inventories remain at extremely low levels on a historical basis. At the end of June, there were approximately 31.4 days of supply relative to total worldwide demand. The rise in 2% rise in OECD inventories has been met by a similar growth in global oil demand, leading to virtually no change in relative inventories. Moreover, this represents more than 7% lower inventories as compared to the 10-year average. As shown in the graph above, OECD inventories on a days supply basis are very near 10-year seasonal lows. Conclusion Many of the recent bearish oil reports calling for lower oil prices have largely centered around swelling absolute U.S. inventories. While the recent large U.S. oil inventory builds are cause for concern, it is too early to conclude that the global oil market is ready to tank. Based on the latest available data from the U.S. DOE and the IEA, we would point out that: (1) most of the builds have occurred in the U.S., largely due to rising imports, (2) inventories remain below 10-year highs, and (3) inventories remain below average on a relative (days of supply) basis. Accordingly, we remain convinced that barring a global economic recession, the oil market will remain tight over the next several years and beyond.