Oil, Supply is not the issue

[Fledermaus]

Even the International Energy Agency, a body representing oil importers, says global inventories of crude will rise this year, an indicator that supply is actually in excess of demand.

To illustrate the fact, look no further than the waters off Iran’s oil export terminal on Kharg Island in the Gulf, where tankers containing 30 million barrels of crude are anchored, waiting for buyers.

Opec, which controls 40 per cent of world production, is doing exactly what it is designed to do – matching supply to demand.

The problem is not supply, it is the price. Of course, high prices are to some extent reflecting fears of a possible future shortage of oil, as strong demand has reduced the global cushion of spare capacity to an historic low.

But other factors are also at play, and right now it is these other factors – broadly described as speculative money flows – that are determining the price.

http://www.thenational.ae/article/20080522/BUSINESS/843587232/-1/ART

[Arctic Dave]

1. They may be lined up off the coast of Iran but

looking out my window at the Prudhoe Bay oilfields we have every drilling rig in operation, they are building more and are pulling outdated mothballed rigs back into service. This last year we were as busy as I've ever seen it and next winters drilling season is supposed to be even busier. I guess its all were you work at.

[Speck Tater]

2. Consider the source.

The OPEC nations (and this newspaper originates in an OPEC nation) are doing everything they can to push the idea that they don't have to increase supply, to cover up the fact that they are unable to increase supply. They don't want panic in the markets, so they keep pushing the same lies.

Others claim that those "30 million barrels" in the harbor are really empty ship waiting for oil that isn't coming.

As for the statement "Even the International Energy Agency, a body representing oil importers, says global inventories of crude will rise this year, an indicator that supply is actually in excess of demand.", haven't they heard that the IEA is revisiting it's figures and expects to revise it's outlook for supply DOWN; significantly down. It seems disingenuous of them quote claims by the IEA that the IEA itself has already disavowed.

Right now supply is about 85 million barrels per day and demand is about 87 million. Supply is short and getting shorter. Mexico just announced a HUGE drop in production in the first four months of the year. Cheap oil is NEVER coming back. Ever.

[Terry in Austin]

3. Anecdotal distraction

Your other post mentioned "Chock-full" tankers. But this article, made so bold as to mention a number, which kind of blew their case: 30 million barrels would keep the world running for about eight and a half hours.

These guys are not honest.

[Dead_Parrot]

5. Quite

Divided by ~6.7 billion people, that's about 3 cups each. Hardly a massive stockpile.

[bhikkhu]

4. "Crude and Gasoline Inventories Decline"

http://www.123jump.com/economy-story/Crude-and-Gasoline-Inventories-Decline/27808/

That was 4 days ago, and caused a bit of a blip in oil pricing. Inventory issues are frequently the cause of prices rising and falling.

on edit: just for fun I found this while hunting for the link. In the NYT - http://query.nytimes.com/gst/fullpage.html?res=9502E3D9123EF930A25750C0A9659C8B63 "COMMODITIES; Oil Futures Hit 12-Year High On News of Inventory Decline ....'This is as bad as it gets,' said Ed Silliere, vice president for risk management at Energy Merchant in New York...."