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International-UN-NGOs
OPEC says oil inventories at comfortable levels
2006-04-23
WASHINGTON - OPEC oil-producing nations said on Saturday oil prices have risen despite a well-supplied market, adding it was urgent to identify new indicators of price trends to supplant the now-unreliable gauge of oil stocks. “This price rise occurred despite the fact that the market continues to be well-supplied,” Adnan Shihab-Eldin, acting secretary-general of the Organization of Petroleum Exporting Countries, told a meeting of the International Monetary Fund’s policy committee.
I believe this; it's the nervous nellies in the spot and futures markets that are driving the price up.
“The healthy situation on the supply side is further demonstrated by OECD crude oil inventories, which are at comfortable levels both in absolute terms and in days of forward cover, while US commercial crude oil stock levels have reached their highest levels in eight years,” he added, referring to the 30-nation Organization for Economic Cooperation and Development.

Oil prices leapt to a new peak over $75 a barrel on Friday amid persistent worries a showdown over IranÂ’s nuclear program could wind up disrupting supplies.

Finance officials from the Group of Seven rich nations on Friday pointed at oil prices as a potential stumbling block for the global economy and called for increased production and investment. Shihab-Eldin said uncertainties over the future demand for oil were complicating investment decisions and “consequently increasing the risks associated with both under- and over- investment.” He said the need for “appropriate investment” extended to the entire supply-chain.

Shihab-Eldin drew a distinction between the ample supplies on the crude side and tight supplies of refined products.
For example, the really tight gasoline situation in Iran.
Posted by:Steve White

#4  Agreed, the market is anticipating some damage and disruption in the Persian Gulf. Now that we're past the winter heating season, the damage and disruption should occur sooner rather than later. This week may be a good time to top off your heating oil tank. Iran's UNSC deadline is Friday. That's probably as good an opportunity as Bush is going to get before spring of 2007. Any further "diplomacy" just risks more problems with the heating oil supply for next winter.
Posted by: Darrell   2006-04-23 17:24  

#3  it's speculation that Iran et al may either NOT be shipping or will be at lesser levels due to their calling warheads down upon themselves
Posted by: Frank G   2006-04-23 12:41  

#2  if you want to follow official oil inventories, go to:

http://tonto.eia.doe.gov/oog/info/twip/twip_crude.html

it turns out that oil inventories are about 8% above last year

gasoline inventories are, however, a bit below last year; refining capacity is not completely recovered from last year's hurricanes
Posted by: mhw   2006-04-23 11:42  

#1  I don't know if OPEC is being deliberately disengenous(aka lying) or they just don't understand how markets work. But I'll spell it out.

As long as markets are allowed to function there will never be a physical shortage. The level of stocks is irrelevant (although they are used as a proxy for supply demand balance).

The increase in price is due to an increase in demand relative to supply. The equation is very simple, all economic activity in the aggregate, requires energy inputs. Global economic growth is in the region of 4% per annum. Therefore the increase in demand for energy is 4% per annum (minus a stable long term trend in increasing energy efficiency about 0.7%), i.e. demand is increasing at a little over 3% per annum and supply aint keeping up.
Posted by: phil_b   2006-04-23 03:18  

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