PARIS (ResourceInvestor.com) -- Another week, another record. U.S. crude oil on the WTI hit a high of $84 per barrel this week as a series of problems that do not appear to be in any hurry to leave us behind continue to dog the markets.
U.S. crude inventories have dropped 10 weeks in a row to leave the U.S. looking increasingly exposed to any spurt in demand or outages on the market over the winter months. Add to this the slow crawl back to full capacity of the U.S. refining system, ready to suck up more and more crude oil, and one can see continued tightness in U.S. markets to the end of the year.
Meanwhile any hope that increased OPEC output will come to the rescue may prove to be short lived. It appears that the 500,000 barrel per day increase proposed by the cartel is not actually 500,000 barrels per day, but something far less. As we all know, OPEC does not stick to its quotas and this occasion seems no different. Although your guess is as good as anyone else’s, it would seem to make sense that with crude sitting around $80 per barrel they will be keen to pump everything they can. This means the market will be extremely tight for the foreseeable as once again spare capacity evaporates.
Then we have the very unsettling talk over Iran. It appears that, without any evidence at all, Iran is going to be attacked over the allegation that it may be working to get itself nuclear weaponry. In many ways this gives us a better idea about the other nearby conflict in Iraq.
Why? Because there, too, false allegations, doctored and misrepresented, were used - even after being proven false - that Iraq also had weapons of mass destruction. Now the same pattern of repetition is being used to justify an attack on Iran.
The notion that the U.S. and Europe is interested in spreading democracy in the region is also exposed as a falsehood. The multi-billion dollar deal to send attack aircrafts to Saudi Arabia, a vicious military junta, is an obvious sign. So too the support for the thugs of Egypt, Pakistan, Jordan and the rest of the allies in the region - all of whom have blood on their hands.
The desire by Europe and the U.S. to destroy the region and turn its populations into powerless peasants has been a long-running one. It has been going on since the end of World War II with a variety of despotic stooges and coups masterminded by the west. But it has never been more obvious than it is now. There are still people who say the Iraq war was a failure - of course it has been a huge success. The U.S. and Europe have valiantly fought against democracy the world over for 50 years, and they are not about to stop now.
So the increasing likelihood of an attack on Iran, most likely before spring next year, will send oil up to around $100 per barrel.
On the demand side it appears that little is changing. U.S. demand is fairly flat but inching higher, European demand is falling slightly, but Asian demand is continuing to climb. This is diverting some cargoes eastwards while others are being diverted westwards to the U.S. Indeed there is very little news at the moment which is bearish.
The whole situation is compounded by the unpredictable nature of weather in the U.S. Gulf. Storms and hurricanes like Humberto have been forming rapidly and in a very unpredictable manner. Now we have the approach of tropical depression 10 which will most likely turn into Hurricane Jerry by the time we have posted up this article. The category one hurricane will snake its way along the coast of Louisiana and could add a few extra dollars to the price of a barrel.
Of course we are sticking with our $66.60 price bet for Christmas. The idea that we are edging about nervously thinking we have undershot is way out of line.
