This post is a research note from John P. Kilduff Senior Vice President Of Energy at MF Global Ltd. He's also a CNBC contributor.
Just when the market might have thought everything, including the kitchen sink, was priced into this market, the front page of the Wall Street Journal blares the following headline: Energy Watchdog Warns of Oil Production Crunch.
In an ill-timed interview, the head of the IEA foreshadowed the likely of outcome of a new study underway of the future of oil supplies, and the results do not look good.
IEA head, Fatih Birol, states that “the oil investments required may be much, much higher than what people assume." The study is at its mid-point, and will not be released until November. Mr. Birol's comments have served to embolden the bullish sentiment, with crude oil topping $135 per barrel last evening, on the initial release of the story.
Heating oil has also topped $4.00 per gallon in early trading. The protagonist in yesterday's rally was the weekly inventory report: a sharp decline in U.S. oil imports ran headlong into a sharp uptick in refinery utilization rates causing an unexpected drop in supplies of 5 million barrels.