Murky data makes oil trading tricky

Thu Mar 22, 2012 4:01pm EDT
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By Christopher Johnson and Peg Mackey

LONDON (Reuters) - Oil markets are difficult to read at the best of times, but what if key data point in different directions and even the world's biggest producer and main consumer can't agree?

Policy and investment decisions become very difficult.

Oil has risen 15 percent this year to around $125 per barrel on talk the world market is tight and facing a supply crunch.

Speculation over possible war with Iran and even the closure of the Strait of Hormuz in the Middle East Gulf has encouraged investors to buy oil in the hope of making large profits.

Some industry data suggest the market is right to be worried. Other figures say it may be a wild over reaction.

Baseline numbers for demand, supply and inventories are being read quite differently and in some cases are pointing in opposite directions. Vast areas of the world market provide no data at all or incomplete figures, making any sensible forecasts exceptionally difficult.

Even the United States and Saudi Arabia, close allies with huge resources and entire government departments devoted to statistical analysis, can't agree on the state of the market.

Top exporter Saudi Arabia sees fuel supplies far out pacing demand and says there is no justification for oil at current levels. Washington, the world's no. 1 consumer, says producers, namely Saudi Arabia, need to pump more to cool prices.   Continued...

Traders work in the Crude Oil trading pit at the New York Mercantile Exchange in New York, February 22, 2005. REUTERS/Mike Segar