Price Of Oil Up On Chinese Demand

Because I don't have television -- oh, that reminds me -- Sports Bar this afternoon about 3:00 pm to see NASCAR race and golfing. It's really funny: because I don't have a television, I have to "prioritize" my sports viewing and it turns out I seem to enjoy it more. It's a real treat to get to see live sports, and then on top of that, I can watch it while enjoying a nice Texas barbecue. And there's always a chance I will strike up a conversation with ... but I digress..

Back to not having a television. I mentioned to someone, either on the blog or in a personal e-mail, that because I don't catch CNBC any more, I am out of the loop as to what folks are saying about the price of oil.

Don has told me that there has not been a lot of chatter (or at least hysterical chatter) about the relative "high" price of oil. In the past, $100 oil was always a huge matter of discussion. Even my favorite CNBC anchor, Joe Kernen thinks oil should be priced at about $50, based on his comments i the past. I wonder what they all think now.

So, I'm not in the loop, but I've posted that I assumed the rise in the price of oil was due to Chinese demand. And, lo and behold, Rigzone is reporting:

U.S. crude oil futures gained more than $2.50 a barrel in a sharp rally powered by signs of rising Chinese demand and concerns about supply disruptions in the Middle East.
Brent crude recovered from its lowest close in more than a month, but trading was more active in the New York market, with prompt-month September West Texas Intermediate (WTI) leading the gains.

The premium for September crude over December futures widened by 70 cents to $3.60, intensifying a market structure known as backwardation. Analysts cited upbeat data from China and more signs of a sharp fall-off in Libyan oil exports as possible causes for the appreciation of front contracts.

Market watchers also said that a rush to secure long positions in the front month contract ahead of the weekend also contributed to the rally.

There is a lot more at the linked article explaining what is going on, but the market is driven by fear and greed, and it looks like both are playing a role here.

So far, it appears that Bakken operators have collars too low for the current price of oil, and this could present a problem if the price of oil continues to rise.

I have no idea if that last paragraph is accurate, but it probably sounds as good as anything I might hear on CNBC. Smile.

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