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"There’s a few hedge fund managers out there who are masters at knowing how to exploit the peak [oil] theories and hot buttons of supply and demand and by making bold predictions of shocking price advancements to come, they only add more fuel to the bullish fire in a sort of self fulfilling prophecy." — National Gas Week, Sept. 5, 2005 as reprinted in the US Senate Permanent Subcommittee on Investigations’ report, "The Role of Market Speculation in Rising Oil and Gas Prices," June 27, 2006

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I am suspicious about an article that states oil movements are "UP" in every class but one, then focuses on the one that is down implying that oil is being stored off books and not compare the volume of movements to all the others that are up. Are these volumes simply going to Asia? The authors says he went to the report, why is the total change in movements not discussed? That would indicate possible storage, not one line down and all others up.

In the past month we have added 11.9 million barrels of oil into our stock reserves, giving us 32.3 million more barrels of oil than we had on hand January 1.

The author is correct in comparisons to January 1, but neglects to mention that his comparison point is a low point on the chart, like it normally is.

On May 5, we found out that for the second time in as many years, Iran was storing its excess crude oil on tankers in the Persian Gulf, because it had run out of storage space in the desert and was awaiting buyers for its heavy crude. That same day Saudi Arabia cut the discount price for its Arabian Heavy crude to $7.45, hoping to entice more buyers for immediate delivery. We didn’t hear that news, either.

Previously discussed here on FreeRepublic, the crude Iran is having a hard time selling is heavy and sour. The worldwide spread between heavy, sour and light sweet is growing. It is more common for new fields coming on-line to tend towards heavy and sour than light and sweet. More supply in the lower quality is naturally going to lower its price relative the lighter-sweet grades that tend to have declining sources of supply.