Indyphil

Crude Report Stumps Analysts

You nailed it Jack. And Saildog nailed the reason for declining Crude Stocks. Refiners are slowing down, because gas stocks are rising, demand for US Gasoline is falling (slightly). Why would a refiner pay his guys overtime to work their butts off against that backdrop?

But even though refiners are slowing down, the supply of oil (in the form of imports) is slowing even faster.

As Saildog puts it, Ven/Mexico oil is in serious decline, so we are forced to buy more from further away across the Atlantic. That takes more tankers (something like a 5 to 1 ratio or higher - compared to gulf suppliers) to achieve the same flow. Those tankers dont exsist - so instead we just get less of the stuff.

In addition those suppliers are already selling everything they have to Europe and Asia, so we must compete for that oil - hence pressure driving crude prices higher.

The concept of Big oil fudging the stock numbers is entertaining. But the SEC strictly checks the books. The risks are too great. If Big oil really had that much power, why did they spend a decade languishing in sub $20 oil and flirting with banckruptcy?

Whats interesting to note, is that the EIA news last week (Wed June 4th) said much the same thing as the news Yesterday - June 11th. Yet the markets response was very different. Last week the market responded to the increase in gasoline stocks and weakening demand, and overlooked the crude picture. Then Morgan Stanley put them straight with a story about tanker traffic.

This week you could argue weve got noise from folks moving money around responding to the dollars movement.