China. Iran. Nigeria. Oil

Commodity News Center ^ | 6/26/09 | James Bibbings

[h20skier66]

This week (June 22-26) I again fielded a ton of questions from several media sources on oil. This is my recollection of what I was asked, how I responded, and some support for my thinking.

Question: I'm seeing at least two reports that said china consumption is up a second month, up much more than a year ago and at record levels. Platts recently reported that China consumed 33.23 million metric tons of oil in May, up 6% from a year earlier.

Answer: Demand from China may be up, however, according to the International Energy Agency, global demand for crude is off 2.9 percent year over year; US demand is down 4.9%. Although it might be popular and trendy to talk about China being the "next big thing" the reality is that the tail cannot wag the dog no matter how much it tries. The United States is still the world's largest consumer of oil by far and should hold this position for the foreseeable future. Unfortunately for China, at least for now, the laws of nature will not be rewritten.

[h20skier66]

Great read about China and how the government allows banks to lend on speculative commodity purchasing. Also touches on the outlook for oil prices for the near term, lots of good sources.