[ameribbean expat]

Oil was at 115 USD/bbl in mid-June. It opens today at 78 and change USD/bbl.

The dollar has not strengthened that much against other currencies, but it will be appreciating against the yen for some time.

Over the past FOUR MONTHS, the US has increased production by 500,000 barrels per day. Libya has moved from 200k bbl/day to 900k bbl/day.

IEA projection for 2014 global demand growth was only 700k bbl/day. In other words, supply is exceeding projected demand by somewhere in the neighbourhood of a half million barrels/day.

Strong dollar is only part of the equation. Supply/demand is out of whack. Emphasis on “whack”, which is what the Saudis are trying to do to US export potential.

[Alberta's Child]

All good points, but surely all that “excess” oil isn’t sitting in huge tanks somewhere, is it?

[Alberta's Child]

Something else to remember is that global oil prices are quoted in U.S. dollars, but the oil isn't really traded on equal terms on a fully globalized basis. WTI oil prices are falling because there's a growing imbalance between supply and demand of oil here in the U.S. -- which is influenced heavily by the Federal law that prohibits the export of crude oil from the U.S.

If these oil producers in the U.S. are ramping up production even though the forecasts of consumption growth aren't very high, then this probably means that these producers are counting on the U.S. government to lift the ban on crude oil exports.