US controls price of crude oil (People's Daily Op Ed)

[jpak]

http://english.people.com.cn/200609/18/eng20060918_303908.html

Who is controlling the price of crude oil? The British Petroleum Company (BP), OPEC and Russia are all under suspicion, but there is really only one entity controlling the market.

Within one month, the futures contracts of both West Texas Intermediate (WTI) and Brent dropped by more than US$10 and the October contract for WTI decreased 17.5 percent between August 8 and September 11.

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One of the latest reasons for the drop in oil price is the increase in inventory. According to the Energy Information Administration (EIA), the US oil inventory increased unexpectedly during peak oil-consumption seasons, but the oil output of OPEC did not augment. The oil output in Russia, a crude oil supplier, climbed constantly in the wake of continual oil price hikes. According to the news from Moscow on September 4, the oil yield in August was 41.27 million tons, the highest on record. The average daily yield was 9.72 million barrels, a 2.8 percent rise from the same period last year. The yield in July was 40.8 million tons with a daily output of 9.61 million barrels, a 2.2 percent increase from last year. Russia has exceeded Saudi Arabia to become the largest oil producer in the world. In the first eight months of this year, the crude oil yield in Russia was 318.15 million tons, 2.5 percent more than the previous year. However, all Russia can do is fine tune the price.

In fact, only the US can control the price of oil. This May, when the Bush administration gave the order to suspend its strategic oil inventory, the price of oil fell under the control of the government. According to the author's statistics and analysis, the US strategic oil inventory keeps positive correlation with the price of WTI stable with a correlation coefficient of 0.87. In the author's opinion, the purpose of suspending the oil inventory is to control oil prices. Furthermore, in July, when the price of crude oil price reached a new high, the US government claimed it would use its strategic oil inventory to restrain the price if necessary. After that, oil prices began to fall. Why does the US want to curb the price of crude oil this year?

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[madrchsod]

1. the chinese finally figured this out?

that`s what they get when they dance with the devil

[htuttle]

2. I'm sure they've known this awhile

They're just getting around to telling us about it.