As the U.S. strategic petroleum reserve (SPR) approaches capacity (721.5 million barrels filled out of a total possible 727 million, and will be filled by January 2010), the federal government will fade out of the oil-buying business. Some bearish traders believe that this factor can weigh in on prices, since most petroleum stocks in the United States are government-held rather than private. Bullish traders have also used the filling of the Chinese SPR as a reason that oil should go much higher. The team at Casey's Energy Opportunities believe that planned government buying or selling of crude oil for SPRs actually have very little impact in the overall market. However, an overall drawdown of worldwide inventory could put downward pressure on the price of oil. The various countries also have their particular reasons and influences in decisions to tap their reserves. (more)
Why are you saying most petroleum stocks in the US are government held? Are you talking shares of stcok or stock piles? Sorry I'm so dense. Decreased demand can only add to increase in supply, unless of course the supply is manipulated. Prices should come down unless China picks up the slack.
ReplyDeleteStrategic Petroleum Reserves refers to stockpiles.
ReplyDelete