Last Updated : 01 November 2012 at 12:30 IST
Sandy came, Sandy saw and Sandy destructed.
And refineries across the North East Coast in US was shut down. With these refineries shut, crude oil inventories ruled high, invariably bringing in pressure on prices.
Now the refineries have started functioning. This means inventories of crude oil too shall be depressed in the coming days. Still, the crude oil prices are ruling low. Why? Sandy not only destructed the infrastructure in US but also demand for crude oil. As infrastructure facilities like roads and bridges are devastated, no vehicles would run other than two-wheelers. This should take the steam off the crude oil prices, analysts say.
But the truth just begins here.
Sandy may have wreaked havoc and destroyed demand. But it can also create demand. Once the reconstruction efforts gain momentum, power demand would start looking up and what better way to garner power other than running diesel power generators round the clock.
The power-supply infrastructure in cities devastated by Sandy may take weeks to get restored if not months. Until then diesel generators would run the show.
And when reconstruction gets into full throttle mode, that would only enhance fuel demand as hoards of people and loads of steel and bricks and mortar and what-not will have to be transported.
So think twice before going short on crude oil: we have a rally to catch!
No comments:
Post a Comment