In a testament to the brave fighting forces of Iraqi Freedom, it is clear that Iraq can be counted on as being a more reliable supplier of crude than the nuclear ambitious and Israel hating regime, Iran. Bloomberg News reports that Chinese, French, German, Russian, British and U.S. negotiators -- the so-called P5+1 group -- are meeting with their Iranian counterparts in Baghdad. The diplomats earlier arrived together and were transported by the U.S. to a government guest house, according to a Western official who requested anonymity because of the meeting’s sensitivity. While Iran, target of an investigation by the United Nations International Atomic Energy Agency since 2003, denies it is pursuing nuclear weapons, the Islamic Republic has failed to cooperate with inspectors and is under multiple international sanctions. Israel has warned that time to reach an agreement over Iran’s nuclear work isn’t unlimited and hasn’t ruled out military strikes if diplomacy doesn’t work.
At the same time the market has to come to grips with a world that is bulging with inventory. While some suggest that global supply might tighten down the road, questionable growth from China and the real possibility of more economic turmoil in Europe only makes those supplies look even larger. Bloomberg News reports that, "Oil’s Pillar of Strength Fades as China Slows. The first drop in Chinese fuel demand in more than three years is stoking speculation that a slowdown in the world’s second-largest economy will weaken crude prices. Oil-product use in China slid 0.1% last month from a year ago, the first decline since February 2009, according to government data. Inventories in April rose to the highest level in seven months, a May 21 newsletter distributed by the state- run Xinhua news agency showed. The “disappointing” data reinforces the bearish outlook for oil, according to Morgan Stanley, which described the country as a “pillar of strength” for the market in the first quarter."
Stocks in Cushing, Oklahoma will more than likely hit another record in the country of the world’s largest consumer. That may overcome signs of improving gasoline demand. DTN reported U.S. retail gasoline consumption rose sturdily last week as prices continued to fall, SpendingPulse reported Tuesday. The comparison to a year ago remained negative but was a small enough deficit that the next few weeks might well see current demand match or outstrip that seen in late May and early June 2011. As measured by purchases at the pump, gasoline demand increased by about 113,400 b/d, to an average of 9.090 million b/d for the week ended May 18. Demand compared to the same calendar week in 2011 was down 0.9% vs. -3.6% in the previous report. The year-on-year comparison of demand on a four-week average basis showed the long-running shortfall narrowing to 3.9% from the -5.2% seen in the last report. Meanwhile, year-to-date retail gasoline demand strengthened relative to previous weeks, narrowing a year-on-year deficit to -5.2% from the last report's 5.4% figure.