Bending the Third Rail
Because We Should, We Can, We Do
Tuesday, March 13, 2007
Oil Stocks Down
Wow. I was thinking gasoline would be in the $3.50 - $4.00 range this summer. I may be a bit off:
DUBAI -(Dow Jones)- The International Energy Agency warned Tuesday that global oil and fuel inventories were being sucked lower at an unusually high pace this year, leading it to fret about demand being met in the coming months and amplifying the need for more crude from the Organization of Petroleum Exporting Countries.

The agency's widely-anticipated monthly assessment of the global oil balance said that stockpiles of crudes and fuels held by the Organization for Economic Cooperation and Development group of industrialized nations were falling at a pace of 1.26 million barrels a day so far this year and could spell the largest stock draw in a January-to-March period in more than 10 years.

The IEA, which represents the energy security interests of the OECD, also red- flagged an unusual draw down in crude stocks.

The stock draws are happening because of unplanned refinery outages, high crude demand in Europe and high U.S. fuel consumption.
If gasoline can hit $3.00 per gallon on $60/barrel oil, what will it be if gasoline goes to $80 or $100/barrel?

Probably one of the biggest impact statistics on our economy is gasoline prices. On a nominal basis, a $.50/ gallon increase really shouldn't have much impact. But psychologically it severely impacts consumers acting like a major tax. Given that Chucky and Charlene are already pulling in their wallets, you gotta wonder what the summer will bring? Maybe that's why the stock market is looking to retest the panic lows of last week.