If there is one thing in the past year that has received more ridicule than the Fed's horrendous monetary policy it is the IEA unprecedented decision to release 60 million in crude from the global strategic petroleum reserve. One needs to take a simple look at the price of crude just today to see what really is driving the prices in the energy complex. But that does not prevent the IEA from pursuing an obstinate insistence that its decision was justified, and defending the fact that it was nothing more than a puppet in the administration's political plot. From Dow Jones: "The International Energy Agency Wednesday rebutted criticism of its decision to release 60 million barrels of emergency oil stocks, saying the move is having the intended effect. The IEA, which represents major energy consuming countries, hit back at some analysts' "blinkered focus" on the price of oil, which has rebounded above its level prior to the stock release. More important is that the market is now more flexible and the price of light sweet crude, relative to heavier grades, has fallen after increasing sharply following the outbreak of the Libyan civil war, it said." Although the confirmation that not only the Fed redefines Einstein's definition of insanity is this: "The agency also suggested an additional supply release was possible." Great: we are confident JPM just can't wait to lock in another 10% risk free arb by buying up Light Sweet at $107 at the next SPR auction and selling it, with a 3-6 month delay of course, in the open market at $120+.
"We are still seeing a sharp rise in the call [for OPEC crude oil] for the third quarter," said David Fyfe, head of the agency's Oil Industry and Markets Division on a conference call with reporters. "We will assess the situation very carefully in the early part of next week, which will help us to reach a decision."
Until Wednesday, IEA officials have largely downplayed talk of a second emergency release. But Fyfe's comments suggested the IEA is considering that option somewhat more seriously.
The tone of the IEA report contrasted with that of the OPEC monthly report released Tuesday, which emphasized how economic weakness could depress oil demand in the coming period. The IEA Wednesday raised its 2011 oil demand forecast one day after OPEC trimmed its estimate for 2011 demand.
The IEA warned that, despite an increase in production from members of the Organization of Petroleum Exporting Countries in June of 0.8 million barrels a day, the need for additional oil supplies this quarter from the group has barely diminished, due to increases in demand and lower-than-expected production elsewhere.
The IEA's June emergency release has been criticized by many in OPEC as an example of meddling in markets. Some in OPEC have also questioned why the IEA took the action given promises by Saudi Arabia and other OPEC producers to ramp up after talks broke down at the last OPEC meeting in June.
Ah, nothing like adding outright lies to IEA's repertoire of terminal incompetence. Here is the truth about the "surging" demand for Saudi excess capacity oil (which by the way does not exist):
Top oil exporter Saudi Arabia has offered extra crude to its customers for August but refiners, particularly from Asia, have largely declined, a person familiar with the matter said Monday.
"The response received from buyers wasn't very encouraging, so it is early to say if Saudi will up its production more this month," the person told Dow Jones Newswires.
Saudi Arabia in June produced an extra 467,000 barrels a day to lift its crude oil production to almost 9.5 million barrels a day, according to a Dow Jones survey. The kingdom pledged to boost output to as high as 10 million barrels a day in response to mounting demand in the second half of the year. It is unclear where these plans stand after the International Energy Agency decided to draw 60 million barrels of oil from its inventories on June 23.
So while one may or may not wonder what the truth behind the IEA's lies is, one thing is certain: the next time Obama's popularity rating plummets to a new all time low, which should be any second, the IEA can be sure to come to the rescue. Which, as noted above, should add at least another 7 figure number to Jamie Dimon's paycheck, even as it removes another 0.5% from global GDP in the long run.