The struggle between optimists and pessimists goes on and on with neither side as yet gaining a decisive advantage. Oil prices started the week close to $75 a barrel on rising stock markets and hopes for a global recovery; fell to below $70 at mid-week on rising inventories and the outlook for bad employment numbers; and then bounced above $73 on Friday as the stock market gained. Until more definitive information as to the course of the recession arises, this pattern is likely to continue.
Natural gas prices fell to $2.69 per thousand cf last week, the lowest since August 2002, as the government announced that underground storage is filling up. Lack of industrial demand, mild weather, and good production is behind the glut.
US gasoline consumption which was holding its own a couple weeks ago is down as the summer driving season comes to a close. MasterCard reports consumption is 2.2 percent lower than last year and the EIA says that so far in 2009, gasoline consumption is down about 1 percent over last year, while jet fuel is down 13 percent and distillates down 10 percent.
Tanker tracker Petrologistics reports that OPEC shipments were up about 300,000 b/d in July as compared with June. Chatter surrounding the forthcoming OPEC meeting suggests that there will be no change in quotas at the September 9th meeting. Given the drop in world prices for goods and services, OPEC is happy with the relative price of oil for the time being and those members with excess production capacity appear to be taking advantage of the situation.