Oil Prices Fall(Surprise inventory build)

money.cnn.com ^ | staff

[kellynla]

Oil prices fall on surprise inventory build. Gasoline inventories rise 2.1 million barrels. Crude oil stocks up 1.7 million barrels.

[dirtboy]

An unanticipated drop in demand would easily drive up inventories.

So during a week when prices started to drop, consumers signficiantly curbed their consumption, more than previous weeks when the price of gas was spiking?

[Rutles4Ever]

The scope of the suspension is limited. To wit:

http://www.ajc.com/news/content/news/stories/0426natenergy.html

Bush also directed the EPA to suspend environmental rules for gasoline in parts of the country required to use a federal smog-reducing fuel where shortages occur. So far, metro Atlanta has avoided the federal requirement to use reformulated gasoline, but gas stations in 45 counties are required to sell a specially designed Georgia fuel for smog reduction.

The EPA order comes less than a week before the official start of smog season May 1. Starting then, smog-choked parts of the country, particularly in the Sun Belt, will look for signs of heat mixing with industrial and vehicle pollution to form ground-level ozone, an invisible gas that can make it tough for even healthy people to breathe.

EPA spokeswoman Jennifer Wood said if the rules are suspended for a metro area, it would only be for a short time. Waivers typically last about 20 days, she said. Also, the region still would be expected to meet the federal Clean Air standards for ground-level ozone and soot — both ingredients in smog.

The suspension doesn't have as much bite as one would assume from the headlines. Certainly more style than substance.

[Grampa Dave]

You approached the problem like a conservative with a brain and the ability to do something different instead whining for the $inators to do something.

I'd like to think I played an ever-so-tiny part in that.....In a 30 day period starting April 1st, I've only logged 130 miles on any of my cars/trucks. All mileage has been on the motorcyle at 50+mpg. Commuting is without a doubt the larger percentage of my mileage, and at 100 miles a day I can't spend my kid's college fund to get back and forth to work.

So if I'm any example, I've cut my gasoline consumption is half and then some.

See my reply above re not running errands and doing shopping with my OJ Simpson Bronco and delaying the errands and shopping until when my wife isn't working. Then we drive/ride in her Lexus to do these deferred errands and shopping.

Congratulations on approaching the problem as a thinking conservative instead of a whiner.

[thackney]

refineries would have to have produced about five percent more gasoline each day than was being used

Sorry to dispel your conspiracy theories but...

From the previous week, gasoline production from US refineries rose 4.6% and gasoline imports rose 47.5%. Prior to the suspension of the special blend requirements, it was difficult to even import gasoline to meet the new requirements. With that waved, we can restore the stocks we should keep in this country.

This Week In Petroleum, Gasoline, EIA

[Former MSM Viewer]

'coast of Oklahoma'

lolol

[Always Independent]

I'm seeing less cars on the road in socal lately and not just from a day without the illegals. So I think some of the numbers about demand are bogus. Its like disneyland raising the price of admission because they think the public is willing to pay it to enjoy the experience. Demand doesn't have to necessarily result in price increase. But Big oil never really said they are a socially conscious industry either.

[Dead Dog]

Gotta love the free market, prices go up, supply goes up, prices go down.

[MeanWestTexan]

"Oh really? Do you have a crystal ball or something? We are likely not even close to the crest."

As a mineral royalty owner and oilman, I certainly hope you are correct. I'm having trouble finding places to put my money, and have no debt at all. Heck, I overpaid the wife's Julian Gold Card, since she returned stuff.

Alas, however, a huge chunk of the price is speculation-driven.

Barring a strike on Iran, it'll drop all too soon.

[thackney]

please come up with a rational explanation of how the analysts can be so far off as to inventory levels for gasoline in the course of one week

Was the prediction made prior to the suspension of the blending requirements?

[tobyhill]

Of course Iran is just playing the get rich by fear game. The reality of Iran's nuclear program is that it's 5-10 years away and they know it but obviously they are very smart at making money and know how to play our MSM to their benefit. Every morning a NEW thing like this mornings NEW Uranium find, yea right! At the rate they're processing, 1.2% in a month, to get to that 90% mark may take that 5-10 years just to get 2 ounces. The problem Iran has is that they can't get the equipment if they're under sanction even if Russia and China doesn't participate because China and Russia use European third party suppliers for them to make their parts of the equipment. China can buy all the Iranian oil it wants but it won't be enough to supplement the other oil Iran can't sell to other participating boycott nations. Now if they block the straight of Hormuz then I guess they are all for cutting the nose spite the face and that won't last long when they have no money to feed their yuts.

[kellynla]

I wouldn't count on a $100 rebate check showing up in your mailbox. LOL

[CertainInalienableRights]

And the forecasters were off 2.8 million barrels - a much more signficant difference.

Some things to consider...

1) Where do the figures come from? My guess is they are amalgamated based on information released from the individual companies who have gasoline stocks. This would include all sorts of companies, from refineries to gasoline distributors, trucking companies and local gas stations.

2) What are the reporting requirements? It would seem an unecessary burden to make companies report the figures daily. I'd be skeptical that they even report weekly, although I wouldn't put it past the government agency that mandates the reports.

3) How hard are the data points and all they all equally hard? In other words, does the company have to do a full accounting of their inventory for every time they report to the government, or do they perhaps do an "inventory" once per month or once per quarter and then estimate the weeks in between?

Its not like these companies have one giant tank where they can just go out and check the guage and call the government agency. There are shipments coming in and out constanly, plus storage facilities all over the place. In addition, I wouldn't be surprised if the figures attempt to include the inventory of every underground storage tank of every gas station on every corner in America (which involves putting a long stick into the tank and reading the "wet" mark. Can you imagine the error in those readings alone when multiplied by hundreds of thousands of gas staions?

Even at its most accurate, the reports are guestimates at best. The error is going to also fluctuate back and forth around the "real figures". If last week's figures were off on the low end, and this week's figures are off on the high end, then the variance would appear huge even though the actual change is minimal.

[dirtboy]

Was the prediction made prior to the suspension of the blending requirements?

Bush just suspended that late last week. It would not have made a difference in the timeframes we are talking about here - it takes time for refineries to adjust to such rule changes.

[Wristpin]

I understand your point about the so called error being minute. But, what is the cumulative bilking of consumers when this happens? Just a two cent increase translates to near $Billions on a worldwide weekly basis...Who are the shadow figures setting these prices and raking it in?


Meanwhile...Quickie lube in Lawrence, Kansas announces longer operating hours, Price of Crude rises 54 cents to $76.02...

[Dead Dog]

Correct me if I'm but gasonline is sold as it's own commodity at auction, the price is set simply by supply and demand for gasoling..not crude. So in short term, there is NO direct correlation between the price of crude and the price of gas...other than when energy speculators bet on petroleum, they tend to buy both.

[taxcontrol]

Simple axiom of behavior change. Pleasure or Pain (in this case wallet pain) must first be FELT before people will change their behavior.

Further, people often already have gas in their vehicles. A small adjustment in driving habits can extend the purchase point of additional gasoline by a couple of days. The cumulative effect is to create buying pattern changes AFTER the prices spike.

[rock58seg]

Here is a handy website I find very useful. They seem to keep it updated very well, and it's easy to use. I have bookmarked it onto my favorites list, and check it before I need to fill up. Then I plan my route to include the cheapest gas station.

http://autos.msn.com/everyday/gasstations.aspx?zip=&src=Netx

[dirtboy]

Prior to the suspension of the special blend requirements, it was difficult to even import gasoline to meet the new requirements.

Let's see, when did Bush suspend those blend requirements? Hmm, Tuesday of last week. You're trying to tell me that importers were able to tanker in that much more gasoline with that short of a notice. Suuurrreeee...

And looking at your charts, I don't see the import spike you mentioned anyway - and the increase in gasoline refining was part of a trend - something analysts would easily be able to spot.

[sono]

Filling Tanks, Funding Dictators.

[trubluolyguy]

noooooo LOL, actually you can expect gas prices to rise Memorial Day weekend...

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Silly me, and I thought it was all about suply and demand. Higher suplies of oil, should mean lower prices at the pump eventually. Of course that is waaay too logical sounding to be right.