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Pass me a pin and let’s burst this bubble
Crude oil at anywhere near $85/bbl is laughable if there was ever any punch line to this joke. Crude at $85/bbl is 80% higher than a year ago! Crude oil, diesel and gasoline prices are about to tumble and these are some of the reasons why:
There is too much supply and too little demand. Although the U.S inventory data above shows (to view the graph, please subscribe to the En-Pro Blog, send your email to info@en-pro.com) an increase in gasoline demand of 2.7% this is misleading as the actual gasoline demand as supplied at the wholesale level is down 1.9%. Diesel is even worse with the actual delivered demand down 3.3% as opposed to the listed decrease of 0.1%. Due to the volcanic ash problem in Europe this past week, the distillate demand numbers will be a disaster next week as kerosene (jet fuel) is part of the distillate family of refined products.
Staying in Europe; it’s apparent that the economic picture in Greece is becoming as hard to swallow as a week old glass of Retsina. The European Union (EU) has discovered that the Greek budget deficit is much worse than previously forecasted. “So what?” you might ask with good reason. The EU will be forced to rescue Greece, which will devalue the Euro and increase the value of the USD. Crude oil is traded in USD and a higher USD makes crude more expensive for foreign investors, which in turn, slows demand and eventually crude prices. Therefore as the USD increases, crude prices decrease.
Let’s move on to New York, the city that never sleeps and I’ll bet that will be the case for the head honchos at good old Goldman Sachs (GS) who along with Morgan Stanley have been the lead barracudas in the attack of crude oil pricing logic at the expense of the consumer and to the profit of themselves. Well, it seems that the SEC has accused GS of fraud and they may have been the ground zero cause of the near vaporization most of the western worlds economies. “So what?” you again might ask.
By: Roger McKnight, Senior Petroleum Advisor
These two current situations have an impact on the North American and global economies. Find out more in this week’s Energy Report. And find out what The Most Imperial of All Oils tells our Roger McKnight. Sign up by sending your email to: info@en-pro.com.