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Originally Posted by
franksargent 
Your last statement would seem to support the speculation argument.
Not really unless all oil is tied up in the futures market which we know isn't the case because there exists a spot market. Typically we're talking spot price when we talk about the price of oil.
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Show me the land in a bank and I might buy this bogus silver's futures argument.
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If I buy up all the land in an area I take possession of it and I can corner the real estate market in that area. I put the titles for those properties in the bank.
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Futures trade long they also trade short. Supply and Demand? In two words? My ass!
Yes they do also trade short. I'm not sure what the point is here. Either way you're speculating on the future price of the commodity if you aren't actually taking delivery.
Wikipedia is not an authoritative source.
In any case the 1st cause it lists is demand, followed by supply and
finally financial causes.
But lets look at the statements in that section. Masters testified that Chinese demand for petroleum increased by 920 million barrels. Index Speculators' demand for petroleum futures increased by 848 million barrels.
The difference? The Chinese BURNED their petroleum increase. The oil purchased by index speculators was sold back on the market. It represents a 0 barrel real increase in demand unless someone actually TOOK that oil and physically DID something with it.
Like storing somewhere to try to manipulate the market. 848M barrels of oil would be noticed by someone.
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And I don't buy what this Bush hack states either;
The numbers from the DOE's own EIA website don't support his own statement;
China's consumption of oil products increased 16.5% YOY and of crude oil 8% YOY in Q1 of 2008.
EIA's table of world oil consumption ends in 2005 unfortunately. You have to piece the 2006-2008 data from different pages rather than find it in one nice excel spreadsheet.
However, there are figures below. Did you mean to post a link to some EIA numbers? I did not find a comprensive table but didn't spend all THAT much time looking either.
Oil is not a vertical supply as the output varies. However, it is increasing more slowly than demand.
Peak oil may or may not have occured but even then it wont strictly be a vertical supply as two things happen: production drops (ie non-static), and oil that was uneconomical to recover becomes viable.
Land was the example of a vertical supply. Unless you nuke it or lose it to the ocean, you typically don't gain or lose any.
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If I'm to believe his statement then we've already reached
Peak oil, which is possible, but world oil consumption has increased at a rate of ~1.6%/year over the past 25 years (1983-2007), and in fact has tapered off over the past three years (2005-7), relative to the two prior years (2003-4).
NYMEX has gone from ~$70 a year ago to ~$140+ today, so according to Bodman's numbers where's the ~5+% increase in demand over the past year coming from? My answer? Mostly thin air!
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China.
"State ceilings on prices of domestic oil products was the major reason contributing to China's surging oil consumption in the first quarter.
Below-cost fuel prices did not restrain China's demand for oil but rather boosted it, said Shu.
China's gross domestic product (GDP) rose by 10.6 percent in the first quarter, 1.1 percentage points down from a year ago but still at a high level.
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China's net imports of crude oil was 44.95 million tonnes in the first quarter, up 14.9 percent, and net imports of oil products rose by 31.8 percent from a year ago to 5.47 million tonnes, according to General Administration of Customs.
China's imports of diesel in the first quarter surged over 600 percent to 1.66 million tonnes and the imports of gasoline, rose by nearly twice to 76,654 tonnes."
http://news.xinhuanet.com/english/20...nt_8075648.htm
Actual EIA statements:
"The spot price of West Texas Intermediate (WTI) crude oil increased from $122 per barrel on June 4 to $145 per barrel on July 3. Global supply uncertainties, combined with significant demand growth in China, the Middle East, and Latin America are expected to continue to pressure oil markets. WTI prices, which averaged $72 per barrel in 2007, are projected to average $127 per barrel in 2008 and $133 per barrel in 2009.
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World oil consumption continues to grow despite 7 consecutive years of rising prices. Preliminary data indicate that
world oil consumption during the first half of 2008 rose by roughly 520,000 bbl/d compared with year-earlier levels. Compared to year-ago levels, this increase reflects a 170,000-bbl/d gain in the first quarter, followed by an 870,000-bbl/d increase in the second quarter.
A 760,000-bbl/d decline in consumption in OECD countries during the first half of 2008, mainly concentrated in the United States, was more than offset by a 1.3-million-bbl/d increase in consumption in non-OECD nations led by China and the Middle East (World Oil Consumption).
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The pace of supply growth in non-Organization of the Petroleum Exporting Countries (OPEC) is another key determinant of future market conditions. Despite higher prices and recent past projections of substantial growth in non-OPEC supplies that matched or exceeded consumption growth,
actual non-OPEC production fell far short of both expectations and consumption growth.
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OPEC crude production in the second quarter of 2008 averaged an estimated 32.3 million bbl/d, up only slightly from 32.2 million bbl/d in the first quarter. Higher production in Iraq and Angola more than offset lower production in Nigeria caused by security problems and worker strikes. Assuming that Saudi Arabia’s announcement of raising July output to 9.7 million bbl/d results in a higher sustained rate of production through at least September, OPEC crude production is projected to average 32.7 million bbl/d during the third quarter.
At these production levels, available surplus production capacity during the third quarter would be only 1.2 million bbl/d, marking the third consecutive quarter that surplus capacity stood at or below 1.5 million bbl/d. All of this capacity is held by Saudi Arabia (OPEC Surplus Oil Production Capacity). Any industry operating at close to 99 percent of capacity will remain vulnerable to surprises that either boost consumption or disrupt production. Such surprises would place additional upward pressure on prices and contribute to oil price volatility. In this tight global oil market, OPEC countries have also faced delays in adding new production capacity, notably in Algeria and in Saudi Arabia, whose 500,000 bbl/d Khursaniyah project has been pushed back to the end of 2008."
http://www.eia.doe.gov/steo
Note that 2007 saw an actual drop in oil production of 400K bbl/d. Fortunately 2008 production exceeds 2006 production. Or is expected to anyway.
If you look at the steo spreadsheets 2008 production is 86.479M bbl/d with 2008 consumption 86.400M bbl/d. Interestingly enough that 2007 consumption (85.543M) is listed as higher than 2007 production (84.565M).
There's obviously some difference in computation of use vs production unless it's just a typo in the spreadsheet.
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