Interesting observation about ethanol increasing "gasoline" usage by volume, due to its lower energy density. Another interesting thing is that Robert Rapier claims that Saudi production is down because
they wanted to inflate the price, which happens to be completely at odds with what I think. I think in this case, I will presume to disagree with him in spite of his vastly superior credentials.
So, why were oil inventories down less than expected? Because refinery utilization continues to languish. You can see that in the utilization numbers, and you can see it in the fact that gasoline had an unexpected draw. Imports were also up from the previous week, surprising given the situation in Mexico. The other big surprise? Gasoline demand is still almost 1% above last year’s level. (Don’t overlook the role of ethanol there.
As ethanol is added to the fuel supply, volume demand will go up even if miles driven don’t).(...)
It seems that every bit of news lately favors higher oil prices. In the wake of a perfect storm of weather-related and geopolitical events, Tapis went through the $100 mark overnight, and WTI is knocking at the door. In case you have been asleep for a week, the Fed cut interest rates, Mexico’s oil-rich Tabasco region is underwater, and oil companies are evacuating platforms in some parts of the North Sea ahead of a fierce storm predicted to generate 35-foot waves. The wind is howling in Aberdeen already, and did so throughout the night. (One of my engineers is stuck offshore and may have to ride out the storm, forecast for Thursday.)
My prediction? While I have made it through 85% of the year, I think I will lose my
$1,000 bet within 24 hours. However, I don’t expect oil to stay there for very long. I think it will return - probably to stay - in 2008, but I believe it has gotten ahead of itself at the moment.
http://www.theoildrum.com/node/3210
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