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Politics : Rat's Nest - Chronicles of Collapse -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (5113)	11/19/2006 12:28:27 AM
From: Wharf Rat	Read Replies (1) \| Respond to of 24232

Peak Oil Passnotes: Crack Gets High, Oil Gets Sexy Again By Edward Tapamor 17 Nov 2006 at 12:19 PM EST PARIS (ResourceInvestor.com) -- The oil market, and its subsidiary product markets, have been so asleep recently some weeks this commentator wants just wants to put up the `do not disturb` sign and tuck them up in bed with a mug of cocoa. The market herd have been sitting about quietly wondering which way to take themselves now. But it shrugged off a Democrat trouncing of George W. Bush in the American mid-terms, it shrugged off more violence in Iraq, it shrugged of platform occupations and pipeline explosions in Nigeria. It did not even care about Britney’s divorce. However, it has not completely ignored the few mishaps on the refining scene. A man cut through an electric cable at Grangemouth refinery in the U.K., Kuwait reported some trouble, Shell’s [NYSE:RDS-B; LSE:RDSB] Deer Park refinery in Houston was shut for maintenance as have many others. This has led to some genuine movement in the fundamentals of the market, for the first time in two months. At the time of writing the gasoline crack between it and a tonne of crude oil has widened to its biggest since the price collapse of September. Whilst we have been witnessing some received wisdom from the mass media telling us about soaring inventories, as normal, they are about a month behind the game. Inventories of gasoline have been dragged in the opposite direction to what many people thought. Despite imports from Europe the amount of draw down in the stocks in the U.S. has increased week after week. It could be the mild weather meaning people are still travelling about. It could be the general strength of the U.S. economy, it could well be a bit of both. The U.S. average price for regular unleaded gasoline went up by 3.2 cents last week. It is now around $2.23 per gallon and that means the year on year fall in price is a measly 2.8%. The average cost of a gallon of diesel rose by 4.6 cents and is now at $2.55 per gallon. U.S. products are the flavour of the month. People just cannot leave them alone. It is true that they are still 17.3 million barrels higher than their five year average, which is most certainly true. But only five weeks ago, as the market bottomed out, they stood 56.8 million barrels. The draw off in stocks has come at a pretty amazing rate, by 39.5 million barrels in five weeks, that works out around 1.3 million barrels a day. Due to increased usage in the U.S. forward cover for gasoline is now under its five year average. If we get another week like the one we have had you can expect to see some serious short covering, and fast. It roles nicely into what we were discussing last week, that the herd is snorting around looking for an excuse to set off in one way or another. Lots of technical barriers, software selling, have been set up to prevent that at the moment but now the worm could be turning. Do not be surprised to see crude fall to around $55 and then set off on a mild rally next week or the one after. We are not going back to $78 any time that soon, we shall need some true geo-political turmoil for that one; instead we may have to settle for $65 at Christmas. But the slow tightening squeeze of winter and falling stocks could make it quite an interesting market over the next few months. At the very least a little bit more exciting than the last two. resourceinvestor.com