It seems like we can have higher stock prices or lower crude oil prices, but we can't have both....

It seems like we can have higher stock prices or lower crude oil prices, but we can't have both. Crude continues a 6-week rally, moving to its highest price since spring at $94.24. The gasoline ETF: UGA +14.9% in the last month. Earlier, inventory data showed an unexpected draw on stocks.

Comments (6)
  • bbro
    , contributor
    Comments (11216) | Send Message
    Ohio gas prices are now 23 cents higher than last year,,,back into the
    election conversation?
    8 Aug 2012, 11:30 AM Reply Like
  • Glenn Doty
    , contributor
    Comments (1116) | Send Message
    The draw on stocks isn't THAT unexpected. We're importing 1 Mbbl/d less than this time last year, and last year we were drawing ~1 Mbbl/d out of the SPR as well. The current overall draw on liquid fuel inventories is less than 0.2 Mbbl/d.


    Most of this is just refining through more oil to try to leave some storage capacity for the coming super-glut once Iran breaks from the sanctions.



    There's no mystery, and certainly no cause for alarm with crude inventories at 20 Mbbl above the same week last year, and less than 10 Mbbl/d shy of the record.
    Much ado...
    8 Aug 2012, 11:32 AM Reply Like
  • eagle1003
    , contributor
    Comments (1886) | Send Message
    Glenn: So, why is the price of crude rising so quickly from it's recent lows? In fact, why is it going up at all? Any ideas?
    9 Aug 2012, 12:15 AM Reply Like
  • Glenn Doty
    , contributor
    Comments (1116) | Send Message


    I think it boils down to investors refusing to adapt. We are sanctioning Iran, ergo the price should bid up... That might have been true 3 years ago, but it's not the case now, but investors are conditioned to react, and they are reacting.


    Eventually, those same investors are going to lose a lot of money when everyone realizes that the emperor has no clothes; but until then, we're sanctioning IRAN!!! that means oil should go higher...?




    I wonder what will happen when we run out of storage capacity.
    9 Aug 2012, 09:44 PM Reply Like
  • Ray - Kitchener
    , contributor
    Comments (74) | Send Message
    The problem with higher oil prices, is the impact on corporate profits and the squeeze it puts on consumer's budgets. Oil is found in so many products, thus as we approach $100 per barrel, we are getting into Oil Shock territory. The drag on GDP is enormous. Just think what it does to the US war machine. Therefore, higher oil prices will push output lower and the stock market will follow.
    8 Aug 2012, 02:32 PM Reply Like
  • marketman54
    , contributor
    Comments (822) | Send Message
    Lets see with oil and food going up that should really help retail, travel and entertainment!


    Look out world, we are in for some expensive times!
    8 Aug 2012, 10:48 PM Reply Like
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