Thank you for the links. Very helpful Excel formats on the DOE website. I’m sure you are much better versed on those stats than I am, but if I read them correctly:
World-wide production has remained relatively stable over the past 14 months, with production peaking this summer but dropping slightly in the past two or three months.
Stats on the most recent months of world-wide demand not available, but looking at the component areas, it appears that demand has not fallen precipitously.
So, check me if I am wrong, but I just don’t see a huge drop in demand that would justify such a drop in international prices. Unless I am missing something in this commodity market, I conclude that speculation accounted for a significant, but not total, reason for the prices over the summer.
Keep in mind that quoted oil prices are futures market pricing. And expectation of continued growth at the rate of early this year has completely gone away.
Also pricing doesn’t move 10% with 10% increase in demand or 10% decrease in supply. As the market gets tight (and it has been very tight) movements become rather large.
By its very definition, a futures market IS speculation; it is pricing for delivery in the future. During hurricane season refineries can speculate that spot markets can get short so they contract greater volumes, even if at a higher price, to have more control of their pricing. That causes a rise in the futures market prior to their being any real shortage.
It is speculation, but speculation by real consumers based upon actual conditions. If Nigeria is having rebel problems in the late summer early fall it compounds the worries and justifies some additional contracts for deliveries.