Oil hovers near $89 amid surprise US supply jump

[Omaha Steve]

Source: AP

By ALEX KENNEDY

SINGAPORE (AP) - Oil prices hovered near $89 a barrel Wednesday in Asia after a report showed U.S. crude supplies unexpectedly jumped last week, a sign demand may be weakening.

Benchmark oil for October delivery was up 14 cents to $89.04 at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose $1.63 to settle at $88.90 on Tuesday.

In London, Brent crude for October delivery was up 27 cents at $114.29 on the ICE Futures exchange.

The American Petroleum Institute said late Tuesday that crude inventories rose 5.1 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 1.2 million barrels.

Read more: http://apnews.excite.com/article/20110831/D9PEV85O1.html

[Myrina]

1. I'm no econ genius but if the supply is increasing, and the demand is dropping ...

... why is the price still going up? :shrug: Are we being played, yet again?

[Cirque du So-What]

2. Value of the US$ is also a factor

A weakening dollar means we pay more for crude on the world market. It's hardly the way conservatroids would have us believe, i.e., all crude obtained from drilling in the Arctic National Wildlife Reserve would remain solely in the US; it would go on the world market like any other crude, where the value of the US$ would play a role in the price consumers pay.

Plus, some refineries along the east coast were shut down in advance of Irene, and I doubt they're all back on-line yet; it's not like flipping an ON/OFF switch.

[TheWraith]

12. Also, actual supply isn't the same thing as theoretical supply.

This is the problem with commodities speculation: it creates artificial "unreal demand." A guy in a high rise buying futures for 50,000 barrels of oil makes the legitimate market "feel" like there's more demand, driving up the price, even though that person has neither the ability nor the intention of taking delivery.

Notice that the price started dropping severely right around the time that Obama signed a reform law regulating commodities trading? And more, when the DOJ announced the formation of a group to look into speculation?

[Kelvin Mace]

3. Refineries shutting down for Irene

gives Big Oil cover to gouge. They did the same thing after Katrina.

But don't worry, it will come down soon when the world economy tanks completely and makes the Great Depression look like being a penny short for chewing gum.

[elocs]

4. Here in western WI the price has marched back up to $3.72/gallon

where it was a month ago.

When there is a rise in the price of oil or a problem with the supply, gas seems to immediately rise but is slow to go back down. Often it jumps up by nickels or dimes and only goes down by pennies.

[Enrique]

5. that's a great question

a question for the Justice Department to answer.

[Kelvin Mace]

6. Oh, and compared to most politicians

you would be an economic genius if you could intelligently explain the difference between micro and macro-economics.

[happyslug]

7. It has been about six weeks since the release of oil from the Strategic reserve

Remember that? If you follow the oil market a price increase (or supply decrease) takes about four weeks to go from the well to your local gas station, but a price decrease (Or Supply increase) takes about eight weeks to go from the oil well to the local gas station.

Now the release from the Strategic oil reserve should be between these two numbers, i.e. may explain why prices went down last week. Since that was a one time release, you can speculate that the price would go up afterward do to the subsequent drop in the amount of oil in the market.

Also remember, this is about the time the Refineries start to shift production from gasoline to Home Heating oil. You produce both at the same time, but how much of each can be changed. Do to the need for home heating oil in the winter, and gasoline in the summer, you have a shift in production at the end of winter and the end of summer. Most people buy home heating fuel in October, in anticipation of winter, thus the oil companies want the oil ready when people want to buy thus the shift is earlier then when people start to buy.

These two factors are probably working together to produce the recent price increase.

[iamthebandfanman]

8. and gas prices just go up and up and up

mind you their excuse last time was that the price of oil was driving it up..

so whats the excuse now?
back to the same ole?

lack of production because of that darn epa?

cant wait to hear the same old lines as before crude oil jumped up.

[SnakeEyes]

9. Actually gas prices have been lower recently

and this time it does sorta parallel to a bbl.

Price of a bbl was 105 at the end of May, late July still at 100, and after Aug 1st it dropped to $80 and now it's actually up again. The $80 drop corresponded with that recent dip in prices, where some areas were down to around $3.20ish/Gal, but on the delay of course. Now prices have creeped back up while the bbl price has gone back up. Though the pump price is not where it was when the price of a bbl was 105 at the end of May.

[iamthebandfanman]

10. gas prices have been the same here since june

and havent dropped below 3.49/g with a high of 3.94 *i think).

do you happen to know what oil prices were before bush?

EDIT:

disregard the last question, i found a chart :)

[SnakeEyes]

14. High of 3.94. low of 3.49

Means they have fluctuated, gone up and down at times since May along with the price of a bbl (on a delay).. as I said happened.

And whatever graphic you wanted posted didnt work.

[7wo7rees]

11. Speculators, y'all

Goldman Sachs is rumored to have bought 3 million barrels of Feb. 2012 WTI oil at a strike price of $88 as it sides with the camp of economists with a more bullish macroeconomic outlook.

"This could provide for high volatility the next six months," said SEB chief commodities analyst Bjarne Schieldrop.

"If Goldman is long oil ... and the rest of the market is short ... everyone else will have to run after the price ..." he explained.

http://www.thestreet.com/story/11234476/1/oil-prices-soar-on-goldman-rumor.html?cm_ven=GOOGLEN

[notadmblnd]

13. Yet the prices went up this morning

it was between 3.69 -3.72. Today is is back in the 3.85 range.:shrug: