The topic of rising oil prices keeps making the front page and the nightly news. T. Boone Pickens is setting $150 as a target price, Goldman Sachs
I am, however, interested in the supply-and-demand fundamentals behind the forecasts. Over the past two days, a few useful reports have come out to help us Fools figure out the market forces at work.
First, on Tuesday, came two separate oil demand-related releases. The International Energy Agency lowered its 2008 demand forecast slightly, while the U.S. government noted that global demand growth came in far less than the expected million-barrel-per-day bump. American fuel consumers, who feel price pressures much more acutely than do end users in heavily subsidized markets, drove the deceleration.
Subsidizing fuel is becoming a costly burden for governments around the world. Malaysia and Indonesia, just to name two, are making significant price adjustments. Still, big boys such as China have so much cash in their coffers that fuel demand can be kept artificially high for quite a while longer. Those low prices are putting Chinese refiners such as PetroChina
On Wednesday, we heard a bit of news on the domestic supply front. Oil inventories dropped far more than expected this week, despite lower refinery utilization.
Oil prices rose yet again yesterday, but think about the implications here. If refiners such as Valero Energy