From the department of the glaringly obvious
WSJ:
“Over the last few months, fundamentals and financial market developments have been moving the oil market in opposite directions. How long this duality can continue is a key question facing the oil market in the coming months,” said Mohammad Alipour-Jeddi, head of OPEC’s petroleum market analysis department…
Supply from non-OPEC countries plus OPEC natural gas liquids and non-conventional oil could top 1.4 million barrels a day in 2008, which is above the expected demand growth of 1.2 million barrels a day this year, Mr. Alipour-Jeddi said. Demand could be slower, depending on how fast the global economy slows, he said. “This would result in a demand for OPEC crude that is lower than current OPEC production of 32.1 million barrels a day,” he said.
Non-OPEC oil supply in the first quarter expanded less than had been expected, but the pace appears to have picked up since, he said. Scheduled refinery maintenance in the second quarter is expected to be around 500,000 barrels a day, compared with refinery outages totaling 1.5 million barrels a day last year, and ethanol production is set to increase by 150,000 barrels a day, he said.
“These developments indicate that product markets this year should be less supportive of crude oil prices than in previous years,” Mr. Alipour-Jeddi said. Crude oil inventories remain above the five-year average, leaving the market with sufficient crude stocks ahead of the spring season, although prices have continued to rise…
So far: “The new rules are: There are no rules” when it comes to the oil market. We’ll just have to wait and see how long that lasts.