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.

[TLI]

Breaking: Man is putting oil in his boat. Spills a drop. Severe shortage COULD happen. Oil up $2.00.

The reporter must have also heard that one of the Saudi's Royal family developed B.O. Oil now up 3.12 and climbing.

[tobyhill]

It's not a surprise, everyone knows that refineries have been closed due to maintenance because last fall it didn't get done and now they are. 25% is a built in speculator fear factor because of Iran, Nigeria and Venezuela and these three countries are playing it to the max with the daily rhetoric.

[Realism]

Someone must have misplaced the newly discovered inventory out behind the storage shed and no one was counting it.

Can't wait to hear this afternoons news that will bring.

[palmer]

That way we can dodge the obvious: we're being raped like drunken two-bit hookers at a Duke lacrosse party.

Then we should sober up.

[I got the rope]

http://www.epa.gov/otaq/rfg.htm

You need to blame someone...and I would blame Clinton and the envirowacks.

Some of the rules that were passed during his term and Bush's term (he's not innocent either) are biting us right in the ass...because they are now taking effect.

The EPA passes tougher and tougher laws with no regard to the cost of what those laws will do. That's what you get when you get career politicians acting like scientists.

[hubbubhubbub]

A tanker full of gasoline just arrived in port. Whoppee!!

[soccer_maniac]

Actually prices are up today

Brent Crude Oil : $74.65/BBL
up 1.02%
Light Crude Oil : $74.61/BBL
up 1.22%

http://www.rigzone.com/

[ahayes]

I'd like to at some point live near enough to my workplace that I can ride a motorcycle in on residential roads. Right now I'd have to drive 12 miles on interstate--I don't want to end up smeared on the road!

[Ditto]

But ... but ... but ... I thought there was a severe SHORTAGE of gasoline. What gives? It's getting clearer that at least part of the recent price spike is due to market manipulation, IMO.

What exactly is getting clearer to you?

[Moose4]

I made up for your conservation. I rang up 1340 miles in my 16 mpg pickup truck between Thursday and Monday. But it was for my wife's jewelrycrafting business, and necessary.

It's sad when I see gas at $2.67 (Spartanburg, South Carolina, home of the consistently cheapest gas I've ever seen) and practically squeal like a little girl with delight because it's 30+ cents less a gallon than it is here in Richmond. :/

}:-)4

[NAVY84]

Actually there are some good deals out there. I normally take 1 week local and 1 week away. This year for about the same $$$ we get three weeks 1 local and 2 weeks away. I'll spend a bit more in the final tally but bottom line, gas is not my deciding factor.

[RetiredArmy]

Didn't fall here today. One station shot up 7 cents this morning. He went up 6 cents just the end of last week.

[dirtboy]

What exactly is getting clearer to you?

That someone is playing games with the market to manipulate prices. Bush only changed the rules regarding reformulations last week. And the analysts were blindsided by the inventory increases:

In its weekly stockpile report, the Energy Information Administration said crude supplies rose by 1.7 million barrels, while closely watched gasoline inventories swelled by 2.1 million barrels. Analysts were looking for a 100,000 barrel decline in crude and a 700,000 barrel drop in gasoline supplies, according to Reuters.

That is not a trivial difference. IMO someone has been underreporting inventory to drive up prices and is now reporting it under cover of Bush's announcements.

This is not meant to claim that Bush had anything to do with this swing, just that someone took advantage of the news to cover their tracks.

[mnehring]

There wasn't a shortage, the ratio of supply to demand was low. Shortages are the failure of either supply/demand cycle or infrastructure. If supply increases to a greater context to demand, the prices will drop as we see here. Don't fall for the market manipulation crap..

[dirtboy]

Don't fall for the market manipulation crap..

Then why the absolutely huge variance in inventories between what analysts expected versus what was reported? Analysts are in the business of trying to know exactly what is going on. And they were blindsided.

I have resisted the notion that there is market manipulation going on. If this report is any indication, the reason why people believed that, as you claim, that the ratio of supply to demand was low, this report shows that belief was not based in reality. Which means someone was manipulating the flow of information to jack up prices in the futures market.

[taxcontrol]

Oil supplies are not a direct one to one correlation to gasoline supplies. Gas is dependent on oil. But Gas also has a constraining factor in that we can only convert so much oil to gasoline (called refining capacity). We are currently near maximum refining capacity at the moment.

This is in part due to the gulf coast hurricanes which pushed off required maintenance till spring, taking some capacity off line, and further, it is driven by the fact that we have not allowed oil companies to build new capacity in the US for several years now.

[Realism]

Some of the rules that were passed during his term and Bush's term (he's not innocent either) are biting us right in the ass...

What would that have to do with the price of crude? I have yet to see any signs that gasoline is in short supply. Every station on every corner in town has some.

The price of asphalt (which requires petroleum)has increased also, does that mean there's a severe shortage of asphalt plants or EPA is giving them a hard time?

[mnehring]

'Analysts' were blindsided as you put it, because market projections usually are six months to a year out. The changes in supply by the President in the Strategic Reserve changes were almost immediate and unexpected, and thus, weren't a part of the speculation created months or even weeks ago.

The futures market is nothing but a big auction for future supplies. Every year that goes by brings more and more bidders into the auction. With more oil going on the market versus in the reserve, there is more product to bid on, and thus greater supply correlated to existing demand projections results in lower prices.

[Ditto]

That is not a trivial difference. IMO someone has been underreporting inventory to drive up prices and is now reporting it under cover of Bush's announcements.

In your "opinion." It couldn't be that refineries completed maintenance and produced more product? Or that due to high prices, more refined product was imported? It has to be someone scheming to sit on inventory instead of selling it which actually reduces their daily cash flow.

In your opinion, was it just one, "someone" or were there a whole bunch of "someones" who conspired to hold inventory just to drive up prices?

[dirtboy]

Oil supplies are not a direct one to one correlation to gasoline supplies. Gas is dependent on oil. But Gas also has a constraining factor in that we can only convert so much oil to gasoline (called refining capacity). We are currently near maximum refining capacity at the moment.

You still have not answered the underlying issue here - why did gasoline inventories RISE 2.1 million barrels when analysts thought they would DECLINE 700,000 barrels? That's means the analysts were 2.8 MILLION BARRELLS off in their estimates - or about 33 percent of daily gasoline consumption. In other words, over the course of one week, refineries would have to have produced about five percent more gasoline each day than was being used - not the indication of a tight market like we saw with Katrina.

IMO someone has been underreporting inventories to help jack up the futures market.