Crude oil will have to fall eventually because supplies are adequate and demand is not the greatest for this time of year. You can't justify crude oil at close to $60.
The weekly inventory numbers caught the market by surprise again. The unanimous UN decision demanding Iran stop nuclear enrichment probably rekindled concern that Iran will use oil as a political weapon.
The mild weather and contracting demand are continuing to send us lower. Crude oil will soon test $56 and the products $1.50.
The surprising fall in gasoline stocks and the approach of the cold are sending us higher. Also, imports contracted and gasoline demand rose.
The effects of Katrina will be felt throughout the economy, reducing demand and keeping a lid on energy prices. The federal government is ready to release barrels from the Strategic Petroleum Reserve and there is significant help coming from abroad.
The conclusion is probably being made that any surplus will be promptly sopped up as soon as seasonal demand kicks in.
All the elements that brought us to this level are still with us. The growing demand in China and India is not going away. Nor do I see geopolitical tensions diminishing. I'm not expecting an outbreak or reasonableness in the Middle East anytime soon.