Posted on 05/13/2008 10:49:28 AM PDT by tatown
LONDON (Thomson Financial) - The International Energy (otcbb: IENI.OB - news - people ) Agency has slashed its 2008 oil product demand forecast again in its monthly report, this time by 390,000 barrels per day, and hinted at more cuts in the future.
Oil product demand this year is now seen at 86.8 million barrels per day (bpd), against 87.2 million bpd forecast in last month's report, said the energy adviser to 27 oil consuming countries in its May monthly report. Slower growth in the United States and other industrialised nations will weaken demand, said the IEA.
'This report sees further downward adjustments to demand, and they may not be the last. Despite an aggressive cut last month in our U.S. demand forecast, further downward revisions are needed this month,' the IEA said.
'Official March European data are also exceptionally weak. We are currently treating this as a symptom of an early Easter, together with price and weather distortions, but if it extends into April, we may have to trim demand further,' added the IEA.
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(Excerpt) Read more at forbes.com ...
So if demand for oil products goes down, will the price of gas follow?
Reduced growth is still growth.
Here we go! (hopefully)
In a normal market...yes. In a speculative bubble market...eventually.
Well, someone forgot to let the market know, because oil is up $1.68/barrel today to $125.91.
That’s a trick question, right? Of course not, somebody will sneeze in Nigeria, a refinery will go down in Texas, or it will get breezy one day in the Gulf.
“So if demand for oil products goes down, will the price of gas follow?”
yeaaaaaaaaaaaa...right!
the camel jockeys will just cut back on production...
Folks, the only way we are going to solve this problem is for Congress to allow more drilling and more refineries!
Unfortunately, the Senate voted against that bill TODAY!
Just gives the arabs a reason not to increase production
Because of the high costs to governments, many countries are beginning to look at reducing/elimating subsidies which will lead to further demand destruction. Eventually, demand will be destroyed by $120 oil.
Pop! Goes Soros’ oil bubble. Too bad George, sniff sniff...
Not only that, but they will start demanding payments in gold instead of our worthless paper money. They have us by the balls and they know it.
And so prices are going up because????
Yeah right. Maybe about 5 cents. In oil these days what goes up doesn’t come down.
But the dollar has been strengthening of late.
So if demand for oil products goes down, will the price of gas follow
“U.S. light crude oil for June delivery briefly hit a record trading high of $126.98 a barrel on the New York Mercantile Exchange on reports that Iran is planning to cut oil production.”
http://money.cnn.com/2008/05/13/markets/markets_newyork/index.htm?postversion=2008051313
If Iran is seeing a glut for some of it’s products, one would expect them to cut production....
“Iran, OPEC’s second-largest oil producer, more than doubled the amount stored in tankers idling in the Persian Gulf, sending ship prices higher as demand for some of its crude fell, people familiar with the situation said.
The 10 tankers hold at least 20 million barrels of oil, equal to about 5 days of the country’s output, said the people, who asked not to be identified because the information isn’t public. Rates for tankers have more than tripled since April 8, based on data from the Baltic Exchange and ship-fuel prices.”
http://www.bloomberg.com/apps/news?pid=20601109&sid=akLt5fJKQNr8&refer=home
And it looks to me like a lot of people don't believe it's done falling...
The other side of a demand argument is about supply.
And so it is that forecasting a decrease in demand, will naturally lead to a slowdown in the oil fields.
Given the forecast, production will probably be adjusted down; and if demand goes the other way — up — the price of oil will increase ... a lot!
I smell a rat in this.
Folks, the only way we are going to solve this problem is for Congress to allow more drilling and more refineries!
When was the last time an oil company tried to build a refinery in the US and couldn’t get it through?
Want to buy a refinery? 220,000 barrels per day capacity. Near superbusy international airport.
Hogwash. The dollar has gone up strongly in the last 2 weeks and oil has had it’s largest runnup during that time. Oil has strengthened strongly against gold in the last year and in the last 10 years. The dollar decline probably only added $15/barrel. The rest is increased demand (mainly from China & India) and speculation coupled with no drilling anywhere new in the US.
As long as nobody does anything about Iran getting nukes, the price of oil will stay parabolic. Or until that gets so silly it is obvious to the meanest capacity. Then the speculators will lose more on it than the banks have lost on dud mortgages.
I’d say of Oil’s runup, probably $15 is due to the weaker dollar, $30 to Iran/instability, $30-40 to demand, and the rest due to speculation. Today’s jump up was Iran.
It is all geopolitics and speculation. All of it.
The high demand and low reserve issues are myths too. The last figures I saw stated our consumption is down about 3% from last year and world reserves have never been higher.
So where the price increase coming from? If we see only $15 of a barrel as a product of the devaluation of our currency, where does the other and larger portion of the increase come from?
Speculators. People that have no better place to put their money than to use it to drive up commodity prices. Do you wonder where they got all of that extra cash?
Why our friends at the Fed provided it. Extra liquidity my ass. Too much money to "invest" and now that the real estate bubble has popped and the market is mostly flat, it's a race to "value."
Of course oil doesn't really have as much value as the bubble has it priced. But until it that bubble pops, and it will, we're stuck with it.
IMO, it's easy enough to stop but I don't see anyone doing anything about it. Up the margin requirements in the market. That's what stopped the Hunt brothers march on silver in years past. Or better still, make the speculators actually take delivery of the commodities they're "buying."
Then dump Helicopter Bernanke and get a conservative in his place and we'll be all set. You might even see $70 a barrel oil again... ;)
Large increased demand from China & India (10%+/year for about 8 years straight--18% for China last year) plus increased demand (2% a year) + speculation is the majority of the increase.
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