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Looking for oil demand in all the wrong places
It’s Wednesday, and the week’s U.S. oil inventories numbers will soon be out. I have no clue what they will say, nor much interest, either. But others do.
Exactly why oil traders and speculators think the data has anything to do with the state of world oil demand is beyond me. I suppose, like Pavlov’s dog, they’re only doing what they’re trained to do. But their training comes from a world that no longer exists.
Inventory levels no longer matter. It is different this time.
Between explosive growth in oil-thirsty economies like China and India, and OPEC’s voracious appetite for its own fuel, OECD fuel markets are becoming increasingly marginal.
He is yet another believer in the Chinese economic miracle story.
In a world where affordable oil supply will soon peak, if it hasn’t already done so, global oil consumption quickly becomes a zero-sum game.
How will China and India continue to "grow explosively" if "affordable oil supply will soon peak"?
Perhaps inventories didn't matter in 2008 either. Let's look to see what he said then.
May 28, 2008
Soaring transportation costs will ignite inflation: Rubin
Mr. Rubin recently predicted oil would gravitate towards US$200 a barrel, driving by soaring consumption in China and the Middle East and constrained supplies.
In hindsight, oil gravitated to $145 a barrel. Soaring transportation costs actually ignited deflation though and oil crashed back down to $30+.
The report argues a mild U.S. recession will be no cure-all for rising inflation which it sees staying around 4% next year and forcing the U.S. Federal Reserve to raise interest rates into a recovery.
In hindsight, we got a severe recession. The non-seasonally adjusted CPI-U rose a grand total of 0.025% from May 2008 to January 2010 (from 216.632 to 216.687). The Fed Fund Rate was 2% in May 2008. It now sits at 0.25%.
June 26, 2008
Road Warning: $7 Gas Ahead
Economist Jeff Rubin predicts the $7 mark will arrive by the year 2010.
Is it 2010 yet? Am I free to use hindsight on this prediction too?
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
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At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
12 hours ago
3 comments:
It is different this time.
China has been reported to have finally cracked the trade secrets of the 'Whizzer' bicycle engine and will soon retrofit every bike in the land.
They've already converted most of the excess office space into modern single cylinder engine facilities and will soon reach full production by the middle of September.
This will leave Mr. Rubin with approximately 3 months to hit his $7 a gallon 2010 forecast.
As Keith at Housing Panic used to say: "It hath been foretold".
If we get several more "crisis averted in (insert blank) no risk remains" headlines it may be that all that money sitting at the banks will find a way out into the system and cause some issues. Almost summer driving season you know? Still, I think oil $100 is going to cause some consternation.
watchtower,
"China has been reported to have finally cracked the trade secrets..."
http://www.youtube.com/watch?v=iQ1cWizAgg4
No wonder the cards are stacked in China's favor these days!
GYSC,
"Still, I think oil $100 is going to cause some consternation."
http://www.theonion.com/content/infograph/soaring_oil_prices_alter
http://www.theonion.com/content/opinion/were_investing_so_much_in
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