Saturday Oil Report -- July 7, 2012

Oil prices rebounded somewhat from their 2012 lows of two weeks ago. Brent crude is almost $7/barrel higher, and WTI is up about $4.

Image courtesy of oil-price.net

I am raising the alarm level back to yellow (caution).

Oil Alarm Level — Yellow

Caution is warranted by the renewed threat of trouble with Iran. New sanctions kicked in last week, but they are so watered down that I doubt much will change in the world oil markets. Otherwise, a quote in this Bloomberg story explains where we stand—

“From here on, the market will be settling down and looking for evidence of improvement in demand,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “We will probably have to wait through to August or September to really start assessing whether we’re getting any sort of a bounce in world economies. Non-farm payrolls tonight loom as potentially a significant short-term factor.”

As you know, non-farm payrolls continued to disappoint, so oil prices fell yesterday. Evidence of improvement in global demand for oil is hard to come by.

I have written a great deal about crude oil lately, so I'm going to keep this report short. The markets are quiet for a change, so let's let sleeping dogs lie.

Here in Pittsburgh it was 97° yesterday. It is supposed to be 98° today. It's hard for me to think, let alone write.

And I've had it up to here talking about "peak oil" and related subjects. I'll let the Cornucopians and Doomers duke it out. There are so many of them and they love to talk. Just go to the Google News section and run the query "peak oil".  To paraphrase Alfred, Lord Tennyson—

Morons to the left of them
Imbeciles to the right
Into the Valley of Death
Rode the six hundred

What will oil prices be in 2 weeks? Unless something untoward happens with Iran or in global financial markets, I believe prices will be just about where they are right now.

Comments

[Anywhere But Here Is Better]

Dave, I agree. Bugger oil. It's the weather that transfixes us, nay impales us. Although in England, we have a slightly different problem to Pittsburgh and New York and most of continental Europe with those 100 degree temperatures.

It's mid-summer in these isles, and for weeks we've had incessant dark skies, deluges of rain occasionally accompanied by golfball hailstones and temperatures rarely above 60°.

Remember all that kerfuffle about S.A.D. (Seasonal Affective Disorder) some years back? It used to be a winter thing, but I detect an epidemic of depression right here and now. Or maybe it's something about the way I look that makes most people in the street grimace and stare at their shoes.

May your weekend be cooler and your pleasure centers warmer.