The fundamentals of supply and demand suggest that oil prices should be falling. On the exploration front, BusinessWeek reports that exploration is down 27.8 percent from 2008 with 309 rigs actively drilling, compared with 428 last year. Overseas there are eight percent fewer rigs drilling than there were in 2008 -- 764, down from 831.
BusinessWeek also reveals that crude inventories are bulging. U.S. crude inventories, at 339 million barrels, are up 27.7 from last year and at 725 million barrels, the strategic petroleum reserve stands at a 27-year record. There is no where to store the crude on land, so 125 million barrels' worth is sitting on tankers -- normally that amount is close to zero.
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