Oil Inventories Head Wrong Way, Again (OIH, DIG, USO, OIL)

The latest weekly inventories data from Department of Energy in crude and oil products is adding more support and adding fuel to a fire in the commodity rally today. It looks like we are back to larger draw-downs that expected. 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.  NYMEX WTI Crude is now up $1.13 at $80.73 as of 10:36 AM EST.

The Department of Energy showed that crude oil inventories fell by 3.93 million barrels to 335.9 million barrels.  Dow Jones had a build expected by 1.4 million barrels, and all we were looking for was anything above flat.

Gasoline inventories fell by 287,000 barrels to 208.27 million barrels.  Dow Jones had estimates at -100,000 yet we were looking for a reading of flat or thereabouts.

Distillates fell by 378,000 barrels.

Refinery capacity went south again, another disappointment.  That was 80.6%, down from 81.76% a week ago and under a Dow Jones estimate of 81.7%.  We were looking for anything flat or above last week.

The Oil Services HOLDRs (NYSE: OIH) is up 0.9% at $121.96, the Ultra Oil & Gas ProShares (NYSE: DIG) is up 1.7% at $34.83, the United States Oil (NYSE: USO) ETF is up 0.9% at $40.98 and the iPath S&P GSCI Crude Oil Total Return Index ETN (NYSE: OIL) is up 0.85% at $27.10.

JON C. OGG