Oil prices are almost exactly where they were two weeks ago when I wrote the previous report. Nymex WTI crude is a few cents below the July 21 price, and Brent is a few bucks higher.
charts courtesy of oil-price.net
There's no need to raise the alarm level.
Oil Alarm Level — Yellow
Why are oil prices holding steady at this elevated level? I don't know. Let's take a quick look at what's going on. We'll start with this remarkable opening sentence from the Washington Post story Oil prices jump 5 percent after US adds most jobs since February.
NEW YORK — The price of oil posted its biggest gain in more than month, jumping nearly 5 percent, after the government reported a sharp rise in jobs growth for July.
Benchmark U.S. crude on Friday rose $4.27 to end the day at $91.40 per barrel in New York. Brent crude, which sets the price for oil imported into the U.S., climbed $3.04, or 2.9 percent, to $108.94 per barrel in London.
OK, let's stop right there.
For your information, the BLS establishment survey indicated that 163,000 jobs were added in June, while the household survey indicated that 195,000 jobs were lost in June, which is why the official unemployment rate went up a tenth of a point to 8.3%, even though the labor force shrank again. On this news the price of U.S. crude rose $4.27 per barrel on Friday, with Brent rising $3.04 per barrel. This is 100% pure bullshit, unadulterated by any realistic consideration.
An obvious question arises for me when I read nonsense like this: is there some other planet I can live on? A quick review of the situation indicates that there are no other habitable planets to live on, so I'm stuck right here.
Now that we're clear about what is causing that irritating, malodorous smell, it might be of interest to you that China's oil consumption declined year-over-year in June for the first time since the first quarter of 2009. I'm not making this up; the story comes from China Daily.
China's oil demand fell for the first time in three years in June with a 1.9 percent drop year-on-year to 36.84 million metric tons, or an average of 9 million barrels a day, according to analysis from New York-based energy and metals information provider Platts on Wednesday based on government data.
The country's daily oil demand in June fell 178,400 barrels a day from 9.18 million barrels a day in the same period last year, which is the first drop since a 2 percent decrease in the first quarter of 2009 in the wake of the global financial crisis, Platts said.
On a daily basis, apparent oil demand last month was at its lowest since September's figure of 8.95 million barrels per day.
Apparent oil demand is calculated on the basis of crude throughput volumes at domestic refineries and net oil product imports reported by the National Bureau of Statistics and Chinese customs, Platts said.
"Industry insiders have been expecting the drop to come because demand for fuel will definitely decline when economic growth slows," said Platts' senior writer for China Song Yen Ling.
We are supposed to believe that China's economy is expanding at a 7-8% annual rate even though its demand for oil is declining. More 100% pure unadulterated bullshit.
So, which is the more important factor influencing oil prices? The fact that China's crude oil demand, which has accounted for about 40% of all new demand since early 2009, declined year-over-year for the first time since then? Or the fact that the BLS added 163,000 jobs which are probably imaginary?
I leave the choice in your capable hands.
What will the oil price be in two weeks? God only knows.
Hear that? That's the sound of the world economy starting to sputter everywhere.
Posted by: Wanooski | 08/04/2012 at 02:12 PM