Crude Back Above the $95 – Oil supplies & dollar drops!

Posted by Oilism.com on December 12th, 2007 at 03:57pm

The crude oil supplies decreased in the week of 7 December with 700,000 barrels up to 304.5 million barrels. This becomes clear from data of the American ministry of Energy. Analysts counted on an average increase of 100,000 barrels, so this figure was lower than expected. 

The petrol and fuel supplies, of which an increase with 1.2 million barrels was forecasted, ended up stronger than expected with an increase of 1.6 million barrels up to 202.2 million barrels of crude oil. The supply stock of heating oil and diesel – decreased with 800,000 barrels up to 131.5 million barrels. Analysts counted here on an increase of 300,000 barrels.

Thereby the refining capacity decreased with 0.6 percent point up to 88.8%. Analysts counted on an increase with 0.1 percent point.  All this rolled up together results in oil price above $95 a barrel in afternoon trade.

The latest interest decision of the Fed will probably not have much influence on the price of crude oil. According to analysts lower interest rates can prevent that the US economy heads up for a recession which stimulates the demand for crude oil. The USA are responsible for a quarter of the worldwide crude oil demand.

An interest lowering increases the pressure on the dollar and makes crude oil much cheaper for foreign currency holders. It is a plausible scenario that these buyers will drive the demand for crude oil further and with that the price a barrel.

In a monthly report the American Energy Information Administration (EIA) makes clear to expect the worldwide oil market will remain tight on demand/supply ratio in 2008. The monthly average crude oil price will come around $85.

Within the near future the EIA expects the worldwide demand for crude oil will grow more rapidly than the supplies outside the OPEC region. Thereby is expected that the decreasing supplies of crude oil will keep playing a major role in on the oil market the upcoming periode.  Finally the EIA believes the consumption of crude oil will decrease with 1.4 million barrels per day in 2008.

Things to keep in mind for crude oil trading in 2008;

• Economic growth, how the credit crunch and housing crisis will impacts the growth and in the end the energy usage.
• Movement toward low mix of distillates and low emission and its impact on future demand for crude oil. 
• The increasing refining capacity shows the limitations on crude oil supplies and the corresponding impact on gross refining margins.
• OPEC’s ability and willingness to provide the worldwide oil market with additional crude supplies. 
• Cold Weather? Let it snow, let it snow…… 
• Worldwide tensions. For example; the rising nationalism in Venezuela and Russia, the Iraq war, the Iranian impasse over nuclear weapons and the Nigerian civil unrest can all have negative influence on the availability of crude oil supplies which is close connected to the crude oil price.
• Al Gore his Environmental Activism and its impact on future energy usage and the development and adoption of fuel and petroleum alternatives like bio ethanol.

Under Crude oil+ energy prices