Hundred-Dollar Oil Could be Just Around the Corner!
The Energy Department (DoE) reported today that U.S. crude oil inventories once again fell sharply, and much more than expected.
That’s not really a big surprise to me, since I watch global energy markets very closely, and have been expecting the usual seasonal strength across the energy complex to begin kicking in.
In fact, if not for the credit crunch correction throwing a healthy dose of fear into investors over the past 60 days – crude oil would probably be a lot higher than $80 a barrel right now.
Back to the numbers: the DoE said that crude oil supplies fell by more than 7 million barrels in the week ended Sept. 7th – that’s more than twice the 2.7 million-barrel decline that analysts forecast.
This comes on the heels of a similarly large shortfall in the last week of August, and couldn’t happen at a worse time.
Seasonality and Continued Strong Demand Point to Still Higher Energy Prices
From a seasonal perspective, right now is the time that refineries and wholesalers should be building crude oil and natural gas stockpiles ahead of the upcoming winter heating oil season. Instead, energy stocks are dwindling as global demand heats up.
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Add to this the ever-present “geo-political” scare – since so much of the world’s oil comes from the most unstable places – and the fact that tropical storm season is just heating up near the Gulf of Mexico; and you’ve got a recipe for tight demand and higher prices.
And it’s not just crude oil either; gasoline prices are rising, also thanks to declining inventories. Heating oil is moving up too, and natural gas surged 8% today alone, after gaining 7% on Tuesday.
Sounds to me like another leg up in the energy commodities bull market is underway. Tune in to my blog tomorrow, when I’ll tell you about some other commodities that are on the move higher, and why.
I think that $100 per barrel could easily happen. We now have to contend with "popup" hurricanes in the Gulf (like Humberto), hurricanes that spring up almost instantly just offshore, and this new breed of storms will only make markets more jittery, IMO.
Posted by: PR | September 15, 2007 at 05:04 AM