Jun 2nd

Well not much to report in the news.

Thursday last week was exciting with news of massive inventory declines.


I dont pay for up to the minute market data, I just watch the delayed data. Which took hours to catch up with reality. The inventory news caused a massive buying spike, but news came out to explain away the shocking data. The oil was here it was just stuck in the gulf due to fog...


That calmed everything back down and by the end of the day we were back on the gradual downward tradjectory. Last week I predicted a path towards $120 in the coming months, we are somewhat closer, down from around $130, to about $126-127. I think this can continue barring any frightening news of production declines or supply disruptions.

I also predicted a Cubs world series win and Obama winning the presidential election. So far those predictions are also panning out. The Cubs Swept Colorado at Wrigley field making it 7 wins straight and earning the title of "best team in MLB" for now anyway. Obama is inching closer to the nomination.

By the way dont take my predictions to mean I am an Obama supporter. I think if I had the choice I would probably vote McCain - but I wouldnt exactly be smiling my way to the polls. Obama does appear to be the straightest talking politician since JFK though. He told crowds in Detroit that their industry needs to do better. Wow. Does he even know that hes a politician?

Interesting articles:
Net export model

That was an article from Jeffrey Brown who goes by username Westexas on the oildrum. Written last year it warns that production declines from our top producing nations are not the only concern.

When you realize that many of the worlds net exporters actually subsidize their fuel price (they can afford to they are still net exporters! they use oil revenue to do it!) then you understand how oil consumption in those countries continues to rise in some cases at 3 or 4% per year.

A plateaued production curve or a decline suddenly looks much sharper when you account for their own increasing thirst for their own oil.

This makes you stop and think about the Saudis claims about excess production capacity. They may have some extra capacity - but they will likley need it just to cover their own needs - or face the prospect of removing some of those glorious subsidies. Imagine how your population reacts when they suddenly are forced to pay the market price for fuel!! Shock horror.