Another week, another record. U.S. crude oil on the WTI hit a high of $84 per barrel this week as a series of problems that do not appear to be in any hurry to leave us behind continue to dog the markets.

U.S. crude inventories have dropped 10 weeks in a row to leave the U.S. looking increasingly exposed to any spurt in demand or outages on the market over the winter months. Add to this the slow crawl back to full capacity of the U.S. refining system, ready to suck up more and more crude oil, and one can see continued tightness in U.S. markets to the end of the year.


Meanwhile any hope that increased OPEC output will come to the rescue may prove to be short lived. It appears that the 500,000 barrel per day increase proposed by the cartel is not actually 500,000 barrels per day, but something far less. As we all know, OPEC does not stick to its quotas and this occasion seems no different. Although your guess is as good as anyone else’s, it would seem to make sense that with crude sitting around $80 per barrel they will be keen to pump everything they can. This means the market will be extremely tight for the foreseeable as once again spare capacity evaporates.

Then we have the very unsettling talk over Iran. It appears that, without any evidence at all, Iran is going to be attacked over the allegation that it may be working to get itself nuclear weaponry. In many ways this gives us a better idea about the other nearby conflict in Iraq.