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Vet67to82 (< 20)

Today's US EIA Crude Inventory Report

Recs

63

May 28, 2009 – Comments (2) | RELATED TICKERS: DXO.DL.DL , UCO , XOM

The floating "global" inventory is not all slated for the USA ... clearly the tankers leased by Iran from the National Iranian Tanker Company (NITC) have nothing to do with the USA ... probable destination - the EU, or China. 

The biggest line in the report is: "Crude inventories at Cushing, Okla., the delivery point for Nymex oil futures, rose 1.1 million barrels to 30.7 million barrels. "  as this implies the "contango" game, although muted, is still alive and well.    Crude delivered to Cushing as "collateral" against NYMEX futures sold short,  is counted by the US EIA as supply ... yet, clearly "collateral" is not supply until such time as it stops being held as "collateral".  

All across the planet, storage and pipelines are being tied up by "collateral" ... this is called a bottleneck ... refiners are forced to work down on site inventory and then BEG for resupply - driving up crude prices even when surrounded by a  sea of "lower demand" crude. 

Use the bottlenecks to tie up "supply" and you can control the price of anything ...     when it's crude and a huge chunk of money stands to be made ... then especially so ...

You may want to review :

 --    Current Crude Pricing and Outlook

... and:

 --    Crude Supply and Bottlenecks

 

2 Comments – Post Your Own

#1) On May 28, 2009 at 1:49 PM, givmeabreak (29.70) wrote:

Vet, where do you see DXO by the end of summer? By the end of the year?

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#2) On May 28, 2009 at 3:30 PM, Vet67to82 (< 20) wrote:

DUTH BK PWRSHR DB CRD OL DUB LNG ETN
DXO

For 5/27/2009 the closing price was 3.8800.

Overall, the bias in prices is: Upwards.

Short term: Prices are moving. Upwards - Bullish

Intermediate term: Prices are trending. Upwards - Bullish

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 3.33.

The projected upper bound is: 4.35.

The projected lower bound is: 3.46.

The projected closing price is: 3.91. 

   -----------

I have a tentative outlook of 5.00 +- 0.25 for September and 6.80+-0.25 for years end ...  at some point the contango players will give up and the floating storage will head for ports to offload as "supply" instead of "collateral" ...  causing a drop in crude prices and also in DXO, UCO, USO, XOM, etc ...

 Note: these price projections are for reference only, and can be easily exceeded by the market.

 

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