Dropping Oil Inventories Knocking ETF’s (USO, OIH)

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By Douglas A. McIntyre Updated Published
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oil-well-imageWe have just seen another build in crude oil inventories according to the Department of Energy data.  The build is not in finished products, but the increase in crude oil inventories was +5.6 million barrels to 366.7 million in the U.S.   Gasoline levels fell by -0.9 million barrels to 216.5 million barrels and distillates fell by -1.2 million barrels to 139.6 million barrels.  This is putting the heat on the United States Oil (USO) and Oil Services HOLDRs (OIH) funds.

If you think this is not demand destruction causing the build-up, guess again.  We have outlined issues with refineries, and that is being shown here as well.  A week ago we had 81.8% capacity, but this week we saw 80.4% capacity.

This looks like it is now the 5th week in a row of a build up in crude oil products.  This also looks like it is getting close to very recent highs in crude levels.

United States Oil (USO) is now down around $29.00 after being at $29.55 before the news. The Oil Services HOLDRs (OIH) also saw a drop to under $84.00 after being around $84.50 before the news.

JON C. OGG

Photo of Douglas A. McIntyre
About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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