U.S. Crude Oil
Inventories
If the increase in crude inventories is more than expected, it implies weaker demand and is bearish for crude prices. The same can be said if a decline in inventories is less than expected.
If the increase in crude inventories is more than expected, it implies weaker demand and is bearish for crude prices. The same can be said if a decline in inventories is less than expected.
Oil inventory dropped
for the first time since September 2018. This indicated a higher demand than
expected. On 1/4/19, Oil prices moved from $44 bbl to $48 bbl and the Dow
gained 750 points. There was also a lot of talk about the Fed Rate Hike mistake on Fox
Business News.
The Energy Information Administration's (EIA)
Crude Oil Inventories measures the weekly change in the number of barrels of
commercial crude oil held by US firms. The level of inventories influences the
price of petroleum products, which can have an impact on inflation.
If the increase in crude is less than expected,
it implies greater demand and is bullish for crude prices. The same can be said
if a decline in inventories is more than expected.
Oil drillers work to
make their drilling time productive. Oil pipelines are under construction to
accommodate planned increases in US oil and gas production. Pipelines are limited and subject to
interruptions. Oil storage is limited and refinery operations can be
interrupted. All of this oil and gas are shipped to refineries hundreds of
miles away. Exporting natural gas requires liquefaction and these facilities
are being added.
Oil demand forecasts
and production plans are written in sand. Central planning seldom works. Oil producers need to concentrate on their
infrastructure to capture demand as it occurs.
Norb Leahy, Dunwoody
GA Tea Party Leader
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