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Vikram Saxena » Comments » Single Comment
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I will respond in detail later, but some quick comments:
May 08 10:17 am
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All Comments by Vikram Saxena »Record High Crude: Free Markets Meet the Cartel [View article]
1.Distillates: The days of supply was at its HIGHEST level for the last 5 weeks! So an increase in the days of supply is seen as a reason to rally???
tonto.eia.doe.gov/oog/...
04/04/08 04/18/08 04/25/08 05/02/08 05/04/07
U.S. 24.6 25.0 24.5 24.9 25.2
Heating oil demand in the US has fallen 28% from its peak in 2003. Usage by airlines is going down as the majors cut capacity and smaller ones go under. Diesel is rising due to higher transportation needs (good!) but the stocks are sufficient to meet demand.
2. Gasoline stocks also went up more than expected. If you are blaming lower refinery utilization for the greater crude inventory, then why did the gasoline inventory go up more? And the lower gasoline utilization (after normalization for growth) does show some elasticity in demand in the US; the sales of SUV vs. smaller cars is the other indication.
3. If you do not believe in the value of technicals, you have never traded commodities. Today PP level is 122.683 and crude oil bounced right around that level. The commercials are balanced in their long/short position (net short) while the speculators who form 30% of the market are heavily long. A little well timed intervention will break the back of this speculative bubble; especially when there is nothing which prevents producers to intervene at these critical technical points and support the upward momentum.
4. We are shipping our wealth away to countries amicable to our interest. Iranian President was waving the $200/barrel flag today. In an environment where speculation is running rampant, it is in our national interest to intervene at strategic points.
5. For those who are upset because they are long oil, just think back a bit and look at the big picture. Shipping our wealth to Venezuala, Iran and Russia is not the best way of ensuring our long term prosperity. There are other ways of making money in the energy patch (oil services, alternative energy, coal).