Model Portfolio timbo56:SSOF1

Well, I have now chucked my model of petroleum price increases, starting at $60/barrel on January 1, 2006 and increasing at $20 per year. It held true for awhile, and I successfully used it as a guide to get in at the troughs and out at the local maxima, but it must now be superseded by a new model having faster price increases. I am thinking of something on the order of $40 per year.

Along these lines, someone please explain to me why the price is down so much from a week ago. First, it seems to me that the Energy Information Agency's (EIA's) explanation for last week's plunge in inventories, that there was fog on the Houston Ship Channel, was disingenuous. I found this article offered by Indian Reuters. it seems peculiar that they should note this in India, but not in the U.S. edition:
http://in.reuters.com/article/oilRpt/idINN2929207020080529">href="http://in.reuters.com/article/oilRpt/idINN2929207020080529">http://in.reuters.com/article/oilRpt/idINN2929207020080529
.

" HOUSTON, May 29 (Reuters) - The Louisiana Offshore Oil Port (LOOP) said on Thursday some crude oil tankers canceled scheduled deliveries last week, but the only U.S. deep-water oil port operated normally.

Delays in Gulf Coast tanker movements was cited by the U.S. Energy Information Administration when it reported an 8.8-million-barrel drop in U.S. crude oil inventories on Thursday.

"We had a light week last week," said LOOP spokeswoman Barb Hestermann. "They don't happen very often, but they do happen."

The LOOP can offload over 900,000 barrels per day (bpd) in crude oil from tankers and takes 500,000 barrels of crude via pipeline from the offshore Mars platform.

The EIA report of tanker delays left the U.S. Coast Guard and shipping sources scratching their heads after repeated calls from reporters asking if they knew of any problems in the major waterways supplying Gulf Coast refineries.

"I've received several calls and I haven't been able to find anything in the New Orleans sector," said Lt. Stephen Nutting of the Coast Guard's New Orleans office.

Sources along the Houston Ship Channel said operations have been normal for several weeks.

Hestermann said she couldn't provide information about the number of tankers that canceled deliveries or the amount of crude they were scheduled to deliver.

The LOOP continued to make deliveries to Gulf Coast refineries via pipeline throughout the week, Hestermann said.

No major weather problems were seen along the Gulf last week nor were there reports of fog halting traffic along Gulf Coast waterways."

So...was it all a big lie?? Just to reassure a skittish public???

With respect to today's figures, which can be found at

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/curren
t/txt/table1.txt
and which does not seem to copy over very well, what I typically do is take the change in the total figure and subtract out the propane/propylene component which always moves in a very tight annual pattern. Doing this shows that looking at petroleum and its range of products we are down a little from last week and about 2.5 percent from last year. Even with these high prices causing people to use less fuel, we are still seeing declining inventories. And it certainly looks as though the answer is not fog on the ship channel. This is still the energy consumption light second quarter, so I fail to see anything whatsoever petroleum price bearish about the figures. Do serious traders go by the press reports and fail to review the easily accessible government figures?? It is a little hard to believe.

In any event, for my funds I am going to buy the petroleum price ETF USO and may also buy some Schlumberger (SLB) and Smith International (SII). After all, if some hurricanes hit, watch out for that petroleum price, it is going to be launched into orbit.