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The standard rejoinder to the SPR release is it is only 16 hours of world consumption. That is missing the point. The US inventories generally decline this time of year and are restocked in the winter. The inventory declines are generally between 1-7 million barrels per week. 30 million barrels will smooth the inventories for 10 weeks at 3 million per week. That is close to the draw down time during the summer.

When the inventories show no decline or increases for the next 10 weeks, oil prices will not be $97.

The big problem is Italy. Most of that Libyan oil used to ship there. IMO, that is most of the reason for the large WTI/Brent spread. Even the supply crunch in Europe will end soon. Western Libya is not the oil production area.

All speculation, of course.


I really appreciate these oil reports. Nice work.

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