Comments on: USO: Revisiting Oil http://stockmarketbeat.com/blog1/2007/02/28/uso-revisiting-oil/ Our beat: The stock market. Our job: Beat it. Sat, 19 Jul 2008 19:49:37 +0000 http://wordpress.org/?v=2.2.1 By: Trent http://stockmarketbeat.com/blog1/2007/02/28/uso-revisiting-oil/#comment-16888 Trent Thu, 01 Mar 2007 13:59:36 +0000 http://stockmarketbeat.com/blog1/2007/02/28/uso-revisiting-oil/#comment-16888 True, but just because the crude is imported doesn't mean supply chain inventories are irrelevant. Lower inventories are going to make prices more susceptible to the "speculation or to geopolitical jitters." And the degree to which there will be greater susceptibility will relate to the inventory days rather than levels. True, but just because the crude is imported doesn’t mean supply chain inventories are irrelevant. Lower inventories are going to make prices more susceptible to the “speculation or to geopolitical jitters.” And the degree to which there will be greater susceptibility will relate to the inventory days rather than levels.

]]> By: wcw http://stockmarketbeat.com/blog1/2007/02/28/uso-revisiting-oil/#comment-16798 wcw Thu, 01 Mar 2007 05:31:08 +0000 http://stockmarketbeat.com/blog1/2007/02/28/uso-revisiting-oil/#comment-16798 You know we disagree on the utility of looking at days supply of crude, but I'll try again. Marginal demand has been imported for some time. Crude imports about double over the time period of your chart. That means that crude stocks in the US are never going to speak to demand again. They may speak to supply-chain efficiency, or to speculation, or to geopolitical jitters, but not to demand. For that, take a gander at products. Once the crude is out of the ground, pipeline, or tanker, it gets turned into product. *That* may sit around, or may be sold immediately. Natural gas is similar, since it's mostly consumed or stored. So, here are some EIA charts. Unleaded: http://tonto.eia.doe.gov/oog/info/twip/gtstusm.gif Distillates: http://tonto.eia.doe.gov/oog/info/twip/disstusm.gif Gas: http://tonto.eia.doe.gov/oog/info/ngs/ngs.gif Demand? Not falling off the map, but certainly not strong. Long term, sure, crude will go up. You could have said the same in 1982 and been just as right. Neither convinces me either to over- or underweight energy. You know we disagree on the utility of looking at days supply of crude, but I’ll try again.

Marginal demand has been imported for some time. Crude imports about double over the time period of your chart. That means that crude stocks in the US are never going to speak to demand again. They may speak to supply-chain efficiency, or to speculation, or to geopolitical jitters, but not to demand.

For that, take a gander at products. Once the crude is out of the ground, pipeline, or tanker, it gets turned into product. *That* may sit around, or may be sold immediately. Natural gas is similar, since it’s mostly consumed or stored. So, here are some EIA charts.

Unleaded: http://tonto.eia.doe.gov/oog/info/twip/gtstusm.gif
Distillates: http://tonto.eia.doe.gov/oog/info/twip/disstusm.gif
Gas:
http://tonto.eia.doe.gov/oog/info/ngs/ngs.gif

Demand? Not falling off the map, but certainly not strong. Long term, sure, crude will go up. You could have said the same in 1982 and been just as right. Neither convinces me either to over- or underweight energy.

]]>