Wednesday, November 18, 2009

Oil Demand Is Dropping Significantly

Oil inventories will be reported today. Hurricane Ida forced Gulf energy producers to shut down 43% of production last week, so we will likely see a draw down. However...

Those who believe oil will rise based on consumption should take a look at this chart showing the total demand for OECD petroleum products:

Please note that we track oil ETFs live here.

Demand and production are one factor, but an equally important factor is the US Dollar. Foreign producers are unlikely to accept receiving worthless dollars for their oil. So, there are forces pulling in opposite directions. A great case for our favorite investment vehicle: straddles.

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