Crude drops as US stocks fall but so does demand
Crude fell Wednesday with November closing 88 cents lower at $105.73/barrel, despite having been around $2 higher earlier in the session.
Ideas that US stocks would fall on the back of pipeline shutdowns in the Gulf of Mexico proved correct. The Energy Dept said that supplies of crude oil fell 1.52 million barrels to 290.2 million in the week ended Sept. 19.
What the trade didn't see coming was that US consumption averaged 19.5 million barrels a day during the past four weeks, down 6.6 percent from a year earlier, and the lowest since October 2003.
The implications for crude don't look good in the coming weeks. Switch supply back on in the aftermath of Gustav & Ike, and keep demand at current levels, and we are going to be looking at some big stocks increases round the corner.
If the proposed US financial bailout doesn't emerge, or gets watered down, the we could be back below $100/barrel before you know it.
Ideas that US stocks would fall on the back of pipeline shutdowns in the Gulf of Mexico proved correct. The Energy Dept said that supplies of crude oil fell 1.52 million barrels to 290.2 million in the week ended Sept. 19.
What the trade didn't see coming was that US consumption averaged 19.5 million barrels a day during the past four weeks, down 6.6 percent from a year earlier, and the lowest since October 2003.
The implications for crude don't look good in the coming weeks. Switch supply back on in the aftermath of Gustav & Ike, and keep demand at current levels, and we are going to be looking at some big stocks increases round the corner.
If the proposed US financial bailout doesn't emerge, or gets watered down, the we could be back below $100/barrel before you know it.
