Oil prices have changed little this week, with NY futures closing on Wednesday at $92.12 and London at $113.22. The weekly stocks report showed the US crude inventory increasing by 2.8 million barrels to 369 million – the highest level since record-keeping began some 30 years ago. US gasoline inventories increased by 1.7 million barrels last week, but distillate stocks fell by 2.2 million barrels and are below the lower limit of the average for this time of year. This continues to support the thesis that there may be heating oil shortages this winter if the weather turns colder as some are predicting.
MasterCard reports that US gasoline demand rose 0.7 percent to 8.6 million b/d last week, but consumption is 3.9 percent below the same week last year while prices are 11.7 percent higher. Year-to-date gasoline demand is 3.8 percent below last year.
Natural gas futures bounced up a bit on Wednesday on expectations that recent cold weather will reduce the amount of gas going into storage to below normal for the week. Some forecasters, however, are calling for warmer temperatures for the next six to ten days, which could reduce demand.
It has been generally quiet on the geopolitical front this week. The EU, yet again, strengthened sanctions on Iran in an effort to close various loopholes. Tehran is threatening to sue the EU. It was revealed this week that the sanctions have cut Iran off from its supply of printed currency as only European printers have the technology to print secure banknotes. There is a debate as to whether less currency in circulation will help or hinder Iran get through the sanctions crisis.
Turkey has banned flights across its territory to Syria in retaliation for Syria banning Turkish flights. The fighting in Syria over strategic cities continues apace. The Israelis have set 22 January as the date of their general election while opinion polls suggest that Prime Minister Netanyahu will win easily.
Europe is still fussing over the details of a loan to Spain while Greece draws ever closer to bankruptcy.
Beijing reports that China’s electricity consumption increased by only 2.9 percent in September and has increased by an average of only 4.8 percent during the first three quarters. This is in comparison with an 11.7 percent increase in 2011. During September, the consumption of power by industrial users increased by only 1 percent, suggesting that China is indeed facing an economic downturn. China’s GDP grew by 7.6 percent in the second quarter. Third quarter results are expected Thursday.