Wednesday, September 27, 2023

Oil is back toward $100. And it's due to Wall Street, not Main Street

Bad enough that Republicans in Congress are set to shut down the federal government as they argue amongst themselves and (as Paul Ryan told fellow WIsconsinites this week) "look like fools" and "can't govern," but we also had a spike in oil prices today.
US oil prices topped $94 a barrel on Wednesday for the first time in over a year, threatening to push up prices at the pump and inflation across the economy.

The latest gains came after federal data showed crude inventories fell by more than expected last week. Stockpiles at the closely watched Cushing, Oklahoma, storage hub plunged to nine-year lows.

“There’s not a lot of oil there and that’s causing some nervousness,” said Tom Kloza, global head of energy analysis at Oil Price Information Service.
But while gasoline availability is not exactly the same as oil availability, I'll note that gas in late September remains more plentiful in America than it's been in any year that wasn't smack dab in the middle of a pandemic.

And Americans continue to moderate their gasoline consumption, using significant less gas than we were in the late 2010s.

And if the shutdown lasts for a significant time, then it might slow the US economy (at least temporarily). So why would oil futures keep rising?
Analysts say bullish bets by hedge funds and other market speculators have helped fuel the latest rally.

“They are gunning for $100 and at this rate they’ll get there. It has a self-fulfilling element to it,” said Robert Yawger, vice director of energy futures at Mizuho Securities. “The sky is the limit.”
There it is. All speculation and BS. Very frustrating, especially if this causes prices as the pump to jump past $4 in these parts in the next month. It's not based on structural realities, just a cynical hope.

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