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Page added on August 17, 2010

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Bloomberg: Goldman says oil demand may have exceeded supply

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Global crude oil demand may have exceeded supply in the past two months as inventories stored on tankers fell to an 18-month low, Goldman Sachs Group Inc. said.

“Now that floating storage has dropped to its lowest levels in over 18 months, we expect to experience declining onshore inventories in coming months,” Goldman Sachs analysts includingDavid Greely and Stefan Wieler said in a report today. “Given that world demand tends to increase seasonally in the second half, we would expect the draw on world inventories to accelerate.”

Oil held on ships may have dropped by as much as 40 million to 45 million barrels in June and July, in part due to the clearing of a “large portion” of Iranian floating storage, Goldman said.

“The June-July discharge of floating storage suggests that the draw at sea has more than offset the build on shore, which the International Energy Agency estimates at 21 million barrels,” Goldman analysts said.

World oil demand exceeded supply by 600,000 barrels a day, or 36.9 million barrels more than normal in June and July, based on the IEA estimate of a 13.3 million barrels draw on combined onshore OECD inventories and global floating storage, Goldman said in the report.

West Texas Intermediate crude time spreads, the difference between monthly futures contracts, have strengthened, suggesting a tighter physical oil market, Goldman said.

Goldman said that the time spread from the first to the 60th month gained as much as $10 a barrel to trade at about minus $8 to minus $10.

“We continue to expect the WTI forward curve to flatten in the second half, lifting prompt WTI prices into the $85-$95 a barrel range,” Goldman said.

The company reiterated its recommendation to buy December WTI crude futures, which traded up 44 cents to $77.38 a barrel at 11:49 a.m. on the New York Mercantile Exchange.

To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net Brian Murphy in London at bmurphy74@bloomberg.net

Bloomberg



8 Comments on "Bloomberg: Goldman says oil demand may have exceeded supply"

  1. KenZ300 on Tue, 17th Aug 2010 11:01 pm 

    The world needs to ramp up production of biofuels to make up for the shortage in supply of oil.

    If we do not ramp up biofuels production fast enough OIL prices will increase and have a negative impact on the worlds economy and family budgets.

    When oil prices hit $147/barrel it hit the economy hard causing consumers to shift their spending. Transportation fuel became a much bigger part of their monthly expenses.

    Will we be ready for the next increase in the price of oil?

    Will biofuel production ramp up fast enough?

    Will automakers dramatically increase the fuel efficiency of their vehicles?

  2. Hans Zandvliet on Wed, 18th Aug 2010 12:16 am 

    There simply is not enough arrable land to replace fossil fuels by bio-fuels. Moreover, that would send food prices skyrocketing. Just like we saw in 2008, that causes world wide food riots.
    We cannot put food in our gas guzlers, unless we are prepared to blame ourselves for letting other people starve!
    Bio-fuels are road-signs leading to hell.

  3. Kristian Mandrup on Wed, 18th Aug 2010 5:38 am 

    The days of cheap motor driving is coming to an end. Nope, they won’t run large scale on electricity, bio fuel, hydrogen or what have you. Check out the energy primer at http://www.dieoff.org by Jay Hanson to understand why.
    The great Civ experiment is once again coming to an end…

  4. Simon Wigzell on Wed, 18th Aug 2010 8:35 am 

    I have ot disagree with KenZ300. We have absolutely no hope of continuing our wasteful and pointless consumerist civilization, nor should we want to. The only hope is to change our lives. Rather give up our “life styles” and start living our lives without all the crap we don’t need, all the crap that just gets in the way. We’ll be happier, we’ll consume a lot less energy and we’ll save the planet.

    STOP CONSUMING!

    SELL YOUR CAR!

    Convert your useless and costly (fertilizer and pesticide) oil based lawn into an organic vegetable garden!

    SELL YOUR TV!

    (keep your computer though)

  5. Stu on Wed, 18th Aug 2010 8:48 am 

    So we use oil to power machines to clear some more land, use oil to plough and cultivate that land, use oil to plant seeds, pump water etc. Use oil to fertilize and harvest those crops. Use oil to transport those crops to the bio fuel plants. Use oil and other fossil fuels to power those plants. Then use oll to transport the bio fuels to the places they are sold and used. Result…net engery lose…..as well as less food available and more natural environment destroyed. Get real

  6. Jack on Wed, 18th Aug 2010 11:00 am 

    SW
    If you don’t work, you don’t need a car. Do we even need a house when a tent in the park would do?

  7. Guest101 on Thu, 19th Aug 2010 5:59 am 

    Pure Insanity!!!!
    Time to wake up, smell the roses, walk out and start a new way ……

  8. KenZ300 on Sun, 22nd Aug 2010 8:15 am 

    Every week the trash we dispose of goes to a landfill. If every landfill also had a cellulose ethanol plant then a good portion of that waste could be used to produce ethanol to fuel our vehicles.
    This would reduce waste going into the landfill and would also provide the raw material at a reasonable cost for the ethanol plant.

    Ethanol from algae also has shown promise… so there are a variety of solutions being worked on with pilot plants being constructed.

    The build out of the infrastructure for ethanol continues with more pumps being installed each day. Every day ethanol capable vehicles come off the assembly line.

    If the price of oil goes back to $147/barrel (and it will) there will be a lot of ethanol bashers lining to fill up at the ethanol pumps.

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