OPEC violating production quotas at the same time as demand from industrialized nations stagnates is spurring bets in the oil market that the 13-month rally in crude is coming to an end. >>READ STORY
“Oil at $87 a barrel seems pretty unreasonable given the fundamentals of the market,” said Addison Armstrong, director of market research at Tradition Energy, a Stamford, Connecticut- based procurement adviser. “Forget China and India for a minute. The U.S. remains the biggest consumer, and U.S. demand hasn’t recovered.”
U.S. demand will drop 9.4% to average 18.84 million barrels a day this year, from a record 20.8 million in 2005, the Energy Department said on April 6. The U.S. uses more than twice as much crude as China, the second-biggest consumer. India is fourth. Consumption in the 30 industrialized countries that belong to the Organization for Economic Cooperation and Development will average 45.4 million barrels a day this year, down 8.3% from 2006, according to the International Energy Agency, which coordinates energy policy of 28 developed nations.
The Commitment of Traders (COT) report shows Commercials adding to their large net short position. On April 16th Commerical traders came in at -146,127 contracts net short, while this Friday, April 23rd, -148,126 contracts net short or an increase of 2,099 short contracts. Commercial Traders are early & usually correct in their timing, since they have a position in the underlying commodity. COT Link
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Crude oil traded above $83 a barrel after the Federal Reserve pledged to keep U.S. interest rates low and a government report showed refineries operating at the highest level.
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