Prices and production

The week started with a continuation of the steadily rising oil prices we saw in the previous two weeks. On Wednesday, however, the roof fell in with the release of the US stocks report showing a 5.1 million barrel increase in US crude inventories. This triggered a $4 a barrel price drop with prices falling below $63 a barrel after having been above $68 on Monday and Tuesday. Total US oil consumption is now down by 4.1 percent over last year; however, June and July 2008 was the time of $140 oil.

Distillate stocks in the US continue to climb. They are now 27 percent above the five-year average and the highest since January 1985.

China’s Petroleum Industry Association reported that Chinese apparent crude consumption dropped by 2.9 percent year on year during first half of 2009. This decline in consumption appears anomalous in light of the 8 percent growth in GDP that China reported in the 2nd quarter. Beijing also announced that their GDP is expected to grow by nearly 9 percent in the 3rd quarter. The issue of economic growth is very sensitive in China. Beijing’s National Statistics bureau recently released an attack on foreign economists who have been questioning some of the Bureau’s numbers.

Curbing Speculation

The Commodity Futures Trading Commission (CFTC) plans to issue a report suggesting that speculators played a significant role in the recent oil price swings. This is a reversal of the Commission’s previous report that said the swings were primarily caused by supply and demand. This role of speculators is contentious. The British hold they play a minor part in price swings, while the French think they are important.

This week the CFTC held the first of three hearings aimed at strengthening rules to limit speculation. In general the oil industry favors tougher regulations while the financial industry opposes them.

EEStor’s New Battery

An interview with Dick Weir, the founder and CEO of the secretive Texas company, EEStor, which says it is developing a Barium-Titanate-based ultra capacitor that will revolutionize the storage of electricity has leaked onto the web. In the interview, Weir reveals many new details of the device that he says will be publicly demonstrated before the end of the year. An inexpensive, high-capacity device to store electricity obviously would be a disruptive technology which could revolutionize many aspects of the energy and transportation businesses.