The bulls are trying to put up a fight here, trying to make a case that the build in stocks and the drop in price over the past month haven't really hurt all that bad. |
The downside looks wide open at this point. We've got lots of inventory, and worldwide supply is going to continue to grow into the year. |
The fact that their pricing mechanism is market-related minimizes the risk that a physical shortage would arise. |
The gasoline build is substantial and it confirms the price weakness we've been seeing over the last several days. |
The laws of economics still apply and higher prices call forth more supply while dampening demand. The long view of the market's history, filled with booms and busts, is on our side. |
The market does have its ongoing concerns about Iran, the new bombing campaign in Iraq and other potential threats to supply (Nigeria, Venezuela) in mind as background issues. |
The market has used considerable energy just to reach this level. We see risk of exhaustion now that it's here. |
The market is certainly tightened by this event. |
The market will ultimately decide how critical the developments in Iran and Nigeria are, but we see the upside potential as limited, given stock levels. |
The markets are all doing their best spin jobs off the latest round of DOE data, but there were really no significant surprises. The overall economic importance of the data is still bearish. |
The markets are bracing for Thursday's DOE reports, with traders cringing since the recent (supply) trends have been bearish. |
The natural-gas market is on a completely different page now, with profit taking on short positions pushing prices higher, despite what are still impressively bearish prospects. This week will be warmer than last week, limiting the extent to which storage might be drawn down. |
The numbers are sufficient, but there are major constraints. There is a huge mal-distribution of workers in the country and most health workers are found in urban areas. |
The oil companies themselves aren't interested in building new refineries and will tend to denigrate the chances of any new investors actually succeeding in their business. They'll say, 'What does Richard Branson know about oil refineries?' He doesn't have to know about that part of the business, but he can easily see that oil refiners are making a margin far superior to what he's making in the airline business. |
The OPEC demand revision is more of a reminder than anything else. Between the high level of crude stocks and the downward revisions to demand, the price should have trouble climbing like it has done this week. |