Global oil demand may not be as bad as expected

Wagging the Dog

Now far be it from me to accuse anyone of trying to change the subject but the first thing that came to my mind when US attorney Eric Holder accused the government of Iran of conspiracy to commit murder was, "Wag the dog." Now I know that is not fair but at the same time it is interesting that this revelation came while the heat is rising on the Attorney General surrounding his testimony about his knowledge about the dangerous program known as, "Fast and Furious". Fast and Furious was an ATF program that sold illegal weapons to drug lords in a sting-like operation that went bad, putting weapons in the hands of dangerous people courtesy of your Federal government. In testimony in front of congress Attorney General Eric Holder said he just found out about the operation but some documents suggest he was briefed on the operation weekly. Now he may not have read those briefings, like he did not read the Arizona immigration law, but after his big Iranian conspiracy splash, he refused to answer questions about the "Fast and Furious" operation.

And why should he? He wrote Congress saying that he only learned the tactics of the operation in early 2011 and denounced those who question whether he lied to congress as “irresponsible and inflammatory.” So there! Now he can go after those darn guitar makers using that illegal wood.

Of course the big story that Mr. Holder was trying to tell us was very disturbing and a sign that the Obama administration's idea of engaging the Iranians has only embolden them. It is clear that Iran sees us and the Obama administration as weak when they had the nerve to use a "weapon of mass destruction" on US soil in an attempt to kill the Saudi Arabian Ambassador to the United States.

Mr. Holder said that two men, one was a member of a secret Iranian military unit and the other with dual U.S.-Iran citizenship, hatched the plan with the implicit beckoning of the Iranian Government. In a plot to use a weapon of mass destruction to kill Saudi Arabia’s ambassador to the U.S. Bloomberg News reported that, " Manssor Arbabsiar and Gholam Shakuri were charged in a purported conspiracy to murder Ambassador Adel Al-Jubeir in a plan hatched earlier this year, according to papers filed in Manhattan federal court. Arbabsiar, a naturalized U.S. citizen, wired more than $100,000 to the U.S. as part of the alleged plot, the government said. U.S. Attorney General Eric Holder said today that the U.S. will hold Iran responsible for any terrorist actions tied to the plot, which he said was sponsored by the Iranian government. He called the conspiracy a “flagrant” violation of international law."

What does that mean? Military action? More sanctions? A ban on pistachios? Well at this point we do not know what bold action this administration may take but let's face it, a story like this can always help boost your sagging poll ratings.

But can it boost crude! Some think it gave crude a pop others said that the pop had more to do with refinery outages out east. Whatever the reason for the pop we got a drop after Slovakia voted against adding money to the EU bank bailout fund. That's right! The globe is pinning its hopes on Slovakia! What a wonderful world we live in! The world's fate is in Slovakia's hands!

The International Energy Agency once again is more bullish on the demand outlook for oil. Gee I wonder why? The IEA says that global oil demand growth this year will grow by 1.42 million bpd in 2012. According to Reuters the IEA says that global oil demand may be more robust than expected, even with a slowdown in economic growth in the United States and Europe, the Chief Economist of the International Energy Agency (IEA) said on Tuesday. Fatih Birol told Reuters on the sidelines of an oil industry conference that fuel consumption in Asia and in the Middle East was holding up fairly well.

"The decline in oil demand may not be so big," Birol said. "Oil is needed to burn at power generators in Japan following the tragic accident at the Fukushima nuclear plant."

"And ... we are seeing good numbers from the Middle East and China. Demand from the Middle East and China is still very strong," he said. OPEC reduced its forecast of global oil demand growth this year by 180,000 barrels per day (bpd) to 880,000 bpd. Next year it sees oil demand growing slightly faster -- by 1.19 million bpd, down 70,000 bpd from its previous estimate in September."

The IEA said, "The outlook for the resumption of production in Libya has improved since last month as companies operating there have moved quickly to restart facilities, it said. Libya was producing 350,000 barrels a day of crude at the start of this month, (something the Energy Report predicted) having previously only expected it to hit this level by the end of the year, the IEA said. The IEA upgraded its estimate for Libyan oil production at the end of the year to 600,000 barrels a day. However, it also warned of lower oil output from countries outside OPEC due to weather and maintenance shut downs. The IEA cut its estimate for non-OPEC production by 0.3 million barrels a day in the fourth quarter and 0.2 million barrels a day in 2012.

The API weekly energy stocks report is today!

Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at pflynn@pfgbest.com.

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

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