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Thread: Oil Falls After Report Shows Unexpected Increase in Supplies (Bloomberg)

  1. #1

    Oil Falls After Report Shows Unexpected Increase in Supplies (Bloomberg)

    [QUOTE]Oil Falls After Report Shows Unexpected Increase in Supplies

    By Mark Shenk

    Bloomberg.com

    July 16 (Bloomberg) -- Crude oil futures fell more than $4 a barrel in New York after a surprise increase in U.S. inventories and as a slowing U.S. economy sapped demand for energy.

    Supplies rose 2.95 million barrels to 296.9 million barrels last week, an Energy Department report showed. Stockpiles were forecast to drop 2.2 million barrels, according a Bloomberg News survey. Fuel demand averaged 20.3 million barrels a day in the past four weeks, down 2 percent from 2007, the department said.

    ``The inventory numbers are starting to reflect the bad macro-economic news,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. ``Not only did we get a surprise build in crude-oil stocks, the products were also up nicely.''

    Crude oil for August delivery fell $4.40, or 3.2 percent, to $134.34 a barrel at 11:25 a.m. on the New York Mercantile Exchange. Prices are heading for the biggest two-day drop since January 2007. Oil traded at $137.53 a barrel before the release of the report at 10:35 a.m. in Washington.

    Oil today fell as low as $132 a barrel, more than 10 percent below the record of $147.27 reached on July 11. A drop of that magnitude is commonly referred to as a correction.

    ``This report is very bearish both in the absolute numbers and in light of the expectations,'' said Kyle Cooper, an analyst at IAF Advisors in Houston.

    Gasoline stockpiles rose 2.47 million barrels to 214.2 million barrels, the report showed. An 800,000 barrel decline was forecast. Inventories of distillate fuel, including heating oil and diesel, gained 3.19 million barrels to 125.7 million, the department said. A 2 million barrel increase was forecast.

    Gasoline for August delivery fell 12.14 cents, or 3.6 percent, to $3.2634 a gallon in New York. Futures reached $3.631 a gallon on July 11, an all-time high.

    Gasoline Demand

    Consumption of gasoline averaged 9.3 million barrels a day over the period, down 2.1 percent from the same period last year, the report showed.

    ``I don't see anything bullish is this report,'' said Rick Mueller, director of oil practice at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``There were higher inventories across the board in the face of weak product demand.''

    Imports rose 13 percent to 10.8 million barrels a day in the week ended July 11, the highest since August, the report showed.

    ``We will have to see if this is a one-week blip or a sustained gain in supplies and imports,'' Mueller said. ``The strong import number may be a sign that the Saudis are both producing more and pricing it to move so refiners will take additional volumes.''

    Saudi Arabia increased oil output by 280,000 barrels a day in June to 9.53 million barrels, the highest since March 2006, according to a Bloomberg News survey. In response to calls from consuming nations, Saudi Arabia said it would produce an extra 300,000 barrels a day in June and another 200,000 barrels a day in July to curb prices.

    Economic Risks

    Yesterday's 4.4 percent decline in New York crude oil futures was the largest since March, as Federal Reserve Chairman Ben S. Bernanke said risks to U.S. economic expansion and inflation have risen.

    Prices paid by U.S. consumers jumped 1.1 percent in June after a 0.6 percent gain the prior month, the Labor Department said today in Washington. It was the most since 2005. Excluding food and energy, so-called core prices climbed 0.3 percent, also more than anticipated.

    Nuclear Negotiations

    Plans by a high-ranking American diplomat to take part in nuclear negotiations with Iran have tempered speculation that the U.S. or Israel may attack OPEC's second biggest oil producer, in a dispute over its nuclear plans. Concern about a possible strike helped push oil prices to a record last week.

    Undersecretary of State William Burns will participate in the European Union-Iran talks this weekend in Geneva, State Department spokesman Sean McCormack said today without giving details. This is a shift in the U.S. position on talks with a government it has shunned since 1980.

    Brent crude oil for August settlement declined $3.50, or 2.5 percent, to $135.25 a barrel on London's ICE Futures Europe exchange. Prices climbed to $147.50 on July 11, the highest since trading began in 1988. [/QUOTE]

    Not exactly the way one would want prices to fall (Bear Market), but it does seem the downturned market is adjusting itself. Combine Bush's end to the Executive Order on Drilling announcement, and this news, and Oil Prices have fallen ~$9.00 a barrel in recent days.

    I wonder, how much it would fall if we had 15-20 Million less demand-users in the United States and if we could increase the supply further via additional drilling and refining capabillity.

    A $9.00 drop without a single extra drop being drilled. Lets hope this trend continues.

  2. #2
    [QUOTE=Warfish;2630272]Not exactly the way one would want prices to fall (Bear Market), but it does seem the downturned market is adjusting itself. Combine Bush's end to the Executive Order on Drilling announcement, and this news, and Oil Prices have fallen ~$9.00 a barrel in recent days.

    .[/QUOTE]

    I missed the part in the story that said this price decrease had anything to do with the drilling announcement.

  3. #3
    [QUOTE=nuu faaola;2630283]I missed the part in the story that said this price decrease had anything to do with the drilling announcement.[/QUOTE]

    Call it the opinion of the thread starter, if thats what it takes to make you feel better Nuu. I thought it was obvious, but I guess it needs spelling out that what is IN the quote is the article, what follows outside the quote is posters opinion.

    I'm guessing you feel the announcement had no effect whatsoever on the price, right? Great, we disagree. Suprise, suprise, suprise.....

  4. #4
    [QUOTE=Warfish;2630296]Call it the opinion of the thread starter, if thats what it takes to make you feel better Nuu. I thought it was obvious, but I guess it needs spelling out that what is IN the quote is the article, what follows outside the quote is posters opinion.

    I'm guessing you feel the announcement had no effect whatsoever on the price, right? Great, we disagree. Suprise, suprise, suprise.....[/QUOTE]

    Of course it had no impact.

    You think the prospect of a tiny oil supply that is years aways from being located and a decade away from actually being online is impacting the current price? Pretty silly view, imo.

  5. #5
    [QUOTE=nuu faaola;2630315]Of course it had no impact.

    You think the prospect of a tiny oil supply that is years aways from being located and a decade away from actually being online is impacting the current price? Pretty silly view, imo.[/QUOTE]

    Sure it is.

    Why, even if we drilled every last drop under our control, it would take 47 Million Years to get into circulation, and even then would only change the price by $0.000000000000000000000000000000000000000001 cents.

    I guess us dumb conservatives are just too stupid to figure out that high-falutin market-thing. Thank God for Democrats to save all us ignant folks from our own stupidity.

  6. #6
    I never really understood the argument of the anti-drillers.


    Let's say you owned a house and the local water company was charging you exorbitant fees. If you knew you could drill a well, at NO cost to you, that would EVENTUALLY give you water, why wouldn't you do it?


    If it's an environmental concern, it should be pionted out that offshore rigs create natural reefs that attract TONS of fish, etc. Also, it is a little known fact most of the oil in the ocean is from NATURAL seepage. Man-made spillage is not even CLOSE.

  7. #7
    [QUOTE=Warfish;2630331]Sure it is.

    Why, even if we drilled every last drop under our control, it would take 47 Million Years to get into circulation, and even then would only change the price by $0.000000000000000000000000000000000000000001 cents.

    I guess us dumb conservatives are just too stupid to figure out that high-falutin market-thing. Thank God for Democrats to save all us ignant folks from our own stupidity.[/QUOTE]

    I am not calling you dumb, so please give that a break.

    The story you posted --from an excellent financial-news source in Bloomberg-- says quite clearly why prices fell:

    [QUOTE]Supplies rose 2.95 million barrels to 296.9 million barrels last week, an Energy Department report showed. Stockpiles were forecast to drop 2.2 million barrels, according a Bloomberg News survey. Fuel demand averaged 20.3 million barrels a day in the past four weeks, down 2 percent from 2007, the department said. [/QUOTE]

    Stockpiles rose when they were expected to fall. Period.

    The idea that global oil prices are going to respond to a tiny amount of oil that (1) has not been located, (2) hasn't actually been approved to be looked for, (3) is, at best, 7-10 years away from the market place is just not a reality-based view.

    Even Bush himself said --as he was making his announcement-- the impact of drilling would be entirely "psychological" and have no impact on current pricing.

  8. #8
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    [quote=nuu faaola;2630315]Of course it had no impact.

    You think the prospect of a tiny oil supply that is years aways from being located and a decade away from actually being online is impacting the current price? Pretty silly view, imo.[/quote]

    Classic post of a typical leftist lacking understanding of speculation and the capitalist marketplace...

    Just 'cause san fran nan says it's a tiny supply, that's proof enough for you. Exploration hasn't taken place, but all you libs KNOW the US is sitting on a tiny supply.

  9. #9
    [QUOTE=Spirit of Weeb;2630415]Classic post of a typical leftist lacking understanding of speculation and the capitalist marketplace...

    Just 'cause san fran nan says it's a tiny supply, that's proof enough for you. Exploration hasn't taken place, but all you libs KNOW the US is sitting on a tiny supply.[/QUOTE]

    As you note, exploration hasn't taken place. So I assume, pointing that out, that you find the previously stated view that its played a role in recent price drops to be absurd.

  10. #10
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    [QUOTE=nuu faaola;2630315]Of course it had no impact.

    You think the prospect of a tiny oil supply that is years aways from being located and a decade away from actually being online is impacting the current price? Pretty silly view, imo.[/QUOTE]

    It's called the "Futures" market for a reason. You know this.

  11. #11
    it's funny that dollar increases in gallon/gas are coddled and downplayed... yet dime DEcreases are always "evidence" that supply is just fine...

    supply is not fine... and demand is not fine...

    gas will be $10/gallon US in our lifetimes, yet none of us will live long enough to outlast the "end" of oil... still, that's not really the point... the point is, finds are not meeting new demands... and mankind is going to suffer greatly because of it...

  12. #12
    [QUOTE=Spirit of Weeb;2630415]Classic post of a typical leftist lacking understanding of speculation and the capitalist marketplace...

    Just 'cause san fran nan says it's a tiny supply, that's proof enough for you. Exploration hasn't taken place, but all you libs KNOW the US is sitting on a tiny supply.[/QUOTE]

    hey read this ya bone head

    [url]http://www.eia.doe.gov/oiaf/servicerpt/anwr/index.html[/url]

    it's by the DoE in 2003 - a Bush administration report detailing how little oil there is in ANWR

  13. #13
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    [QUOTE=SanAntonio_JetFan;2630337]I never really understood the argument of the anti-drillers.


    Let's say you owned a house and the local water company was charging you exorbitant fees. If you knew you could drill a well, at NO cost to you, that would EVENTUALLY give you water, why wouldn't you do it?


    If it's an environmental concern, it should be pionted out that offshore rigs create natural reefs that attract TONS of fish, etc. Also, it is a little known fact most of the oil in the ocean is from NATURAL seepage. Man-made spillage is not even CLOSE.[/QUOTE]

    since when does it cost nothing to drill?!? :confused:

    In actual monetary costs OR impact on the environment, there are costs.

    You then talk about the offshore rigs, but the real environmental impact is the continued burning of gas/diesel for transportation, not the actual drilling process which can cause negative environmental harm

  14. #14
    Why is an increase in supply inventories a surprise? When the price goes up two things happen. Producers push as much production that they can because the make money when prices are up and consumers use less because prices are up.

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