RE:RE:Oil report showedGashole1 wrote: 69chevelleSS wrote: demand was greater than production with a drawdown? And oil goes down....that is called pure manipulation.And some people will reply with you should sell high...buy low...like is that something new....did you invent that? What a joke. What the heck does that got to do with the manipulation of oil and what the 1%ers are doing...they are the ones moving the stock price also.
It dropped because rig counts are rising again and there are fears the balance between supply and demand may be further away that everyone thought. Also inventories dropping 2 million barrels this time of year is not enough, and gasoline inventories are too high also and should be dropping huge right now. In the fall one the driving season is over and we head into the next shoulder season there are thoughts that inventories will continue to rise and we will see an even larger glut. The oil rally might have been premature by 6 months.
I agree that there are seasonal builds and draws in inventories but we are in a period now when inventories are being drawn into. So this setback in crude price isn't due to seasonal influences. 2M barrel draws are actually right in line with historical draws at this point in the year. I just looked at inventory numbers over the past 12 years and we see inventories peaking in April/May and at their lowest in October. According to history, we have 3 more months of draws before we start seeing some builds again. Why would the market start baking this is 3 months in advance? It's not. The price decline is due to uncertainty in the global markets. Neither regards to rigs coming back online, we are starting to see some low-cost producers resuming some un completed wells. The larger issue here is that we aren't seeing many new well starts. As the current wells age, their decline rate increases and production continues to fall. In order to offset this decline rate, companies must start new wells. Due to the massive capex cuts, there is very little money going into new well starts. That is why production will continue to fall and we may continue to see inventory draws, or at least hold steady, into the winter when we typically experience builds. Regarding your last point of inventories continuing to rise, US inventories have declined 7 consecutive weeks now and looks like we will see an 8th this week. Cushing inventories are actually the lowest they've been since January.