Economic Slowdown

As WorldWatch mentioned before the crude demand is in decline as crude oil fell more than $1 a barrel after the U.S. reported inventories surged the most in almost four years as refineries slowed operating rates and imports climbed.
Stockpiles rose 7.05 million barrels to 300 million barrels in the week ended Feb. 1. It was the biggest gain since March 2004. An increase of 2.6 million barrels was expected, petroleum-product supplies also rose.
These are probably the most consistently bearish DOE numbers we will ever see, there was a larger- than-expected crude-oil build due to rising imports and lower refinery runs.
Crude oil for March delivery fell $1.31, , to $87.10 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Oil is heading for the lowest close since Jan. 23. Futures reached a record $100.09 a barrel on Jan. 3. Prices are up 48 percent from a year ago.
Brent crude for March settlement fell $1.10, to $87.72 a barrel on London's ICE Futures Europe exchange. Brent touched a record $98.50 on Jan. 3.
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Stockpiles of crude oil last week were 1.4 percent above the five-year average for the period, the department said. Inventories were 1.8 percent lower than the average two weeks earlier, according to the department. Gasoline supplies were 4.2 percent above the average and distillate inventories were 0.1 percent below.
Refineries operated at 84.3 percent of capacity, down 0.6 percentage point from the prior week, the report showed. It was the lowest rate since March 2006.
The refinery numbers are the big story, refinery margins across the U.S. are really weak so refiners are reducing runs.
Crude-oil imports jumped 4.6 percent to 10.5 million barrels a day, the highest since August, according to the report. Imports of petroleum products surged 26 percent to 4.22 million barrels a day, the highest since May.
Prices fell $1.61 a barrel in New York yesterday on concern the U.S. economy will slow, after the Institute for Supply Management reported that service industries unexpectedly contracted in January at the fastest pace since the 2001 recession. The U.S. consumes about a quarter of the world's oil.
Prices will continue to move substantially lower as the US and some European economies keep worsening and OPEC continues to boost production as it has shown, there will be a series of large inventory builds as demand slips. Prices can easily fall into the $70s.
OPEC production has been strong, with prices near $100 a barrel there was no reason not to produce as much oil as possible last month. Because of the lag we will be seeing those barrels in the weeks ahead and therefore prices can easily fall.