Self Congratulations, Oil, Bonds and Gold

My arm is sore from patting myself on the back. I seldom do this, so your indulgence is appreciated. Both last week and this week the oil inventories have shown unexpected draws. I wondered aloud if it were not the draw that was so high but rather the INPUT that was low.

Voila!

Oil prices fell sharply Thursday after the Energy Department reported unexpected declines in crude oil supplies last week but said the drop was due to temporary delays in unloading oil tankers along the Gulf Coast.

Pat....Pat...Pat...OUCH! It's the news that you do not hear that is important. Now please tell me why some self respecting journalist was not on these specious 'draws'? When you take inventory, you are counting one thing, and one thing only--the quantity on hand. The quantity on hand is based on inputs (how much inventory did you buy) and outputs (how much inventory did you sell or otherwise dispose of (obsolescence). So be aware that when you hear that there is a surprise "draw" that is an misnomer. The surprise is that the inventory level, in this case oil, is lower/higher than expectations. That can mean that some combination of supply/demand (inputs/outputs) contributed. Why the heck don't hey just say so?

The specter of demand that is outstripping supply suddenly is vanquished when you realize that Mother Nature's obfuscation--in the guise of FOG--has hampered the inputs. Nobody is wringing their hands at the oil field saying, "Oh my, what to do; we can't pump it as fast as they want it."


Bond prices are falling (and yields are commensurately lifting).


Inflation now becomes less of a worry with oil coming down and interest rates going up. But...higher rates do not bode well for the consumer and for many businesses. Gold mining stocks do not like it much either.



And we should close with a chart of industrial metals which I've been writing about here:


The picture above is of Annubis--but Annubis is now commodities.