DOE Oil Inventories Back Up (OIH, DIG, USO, OIL)

We have just seen this week’s latest Department of Energy weekly oil inventory data.  The new report is on the heels of a sudden rise in oil prices followed by an almost just as sudden drop in oil prices this week.  Fortunately for the consumer, there was a rise in the key inventory data we follow.  The question is if it is enough of a gain to keep oil as a commodity from attracting too much in new investment dollars.  We are watching the Oil Services HOLDRs (NYSE: OIH), the Ultra Oil & Gas ProShares (NYSE: DIG), the United States Oil (NYSE: USO) ETF and the iPath S&P GSCI Crude Oil Total Return Index ETN (NYSE: OIL) reactions based upon the supply data.  At 10:41 AM EST we have NYMEX WTI Crude down by $1.35 at $78.20 (down from the $79.75 level after inventory a week ago).

The Department of Energy showed a build up in crude oil by 778,000 barrels, but that is will under the 1.7 million Dow Jones had expected.  We were looking for approximately 1 million barrels after speaking with traders.  Gasoline inventories also rose in a reverse of prior weeks with a gain of +1.619 million barrels.  The good news on gasoline is that Dow Jones had estimates of -1.1 million barrels and we were going to be happy with anything that was not in the red.

Distillates fell by -2.134 million barrels.  And the refinery capacity is up again but still low on average at 81.8% after 81.1% a week ago.

The Oil Services HOLDRs (NYSE: OIH) is down 2.4%% at $120.78, the Ultra Oil & Gas ProShares (NYSE: DIG) is down 2.35% at $35.57, the United States Oil (NYSE: USO) ETF is down ‘only’ 0.9% at $40.22 and the iPath S&P GSCI Crude Oil Total Return Index ETN (NYSE: OIL) is down ‘only’ 0.9% at $26.57.

JON C. OGG