Sunday, July 3, 2016

They Lie, They Profit, We Pay

Same as it ever was.  There are a lot of Countries, Politically connected Traders (Brokerage Houses), and Banks desperate to keep the price of oil high.  One only need to take a look at Venezuela to see what the future looks like in OPEC land.  But not just countries, banks from around the world lent freely to oil producers and oil needs to be at much higher price than currently to ensure repayment.

Enter the Brokers, many owned by the same banks who made these loans, and the industry, who creates the numbers that drives the price.  If only those numbers can be made to be more optimistically than reality, and the futures traders could key on that with leverage to drive the price of oil higher.  Well it seems like that is indeed what happened, and now the data is catching up, right at the same time oil demand gets even weaker.

So I expect a sharp fall off in the price of oil the remainder of summer, and if I am right regarding Atlantic Hurricane season being weak, again.  The price drop can continue through the fall.

America's "Soaring" Gasoline And Oil Demand Was Just An Illusion: How The EIA Fooled The Algos

Tyler Durden's picture
When it comes to "real-time" measurements of crude demand and supply, the data is notoriously bad (and perhaps, according to some, intentionally manipulated). We pointed this out most recently in early March when we that according to IEA data, crude oil production exceeded consumption by an average of 0.9 million barrels per day in 2014 and 2.0 million bpd in 2015. Of this 1 billion barrels which the IEA said was produced but not consumer, some 420 million are said to be stored on land in OECD member countries and another 75 million can be found stored at sea or in transit by tanker somewhere from the oil fields to the refineries. This means that as of this moment, about 550 million "missing barrels" are unaccounted for "apparently produced but not consumed and not visible in the inventory statistics."

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