Mixed Oil Inventories; Refineries Return (OIH, DIG, USO, OIL)

The weekly oil inventory data from the Department of Energy is out with some very mixed data.   The headline data on crude may be a shocker, but the rest of the data is counteracting it somewhat.  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) as the key ETFs on the news.   NYMEX WTI Crude is up $0.06 per barrel at $76.08 10:34 AM EST after the news, which is a far lower price than what has been seen into weekly inventory data in recent weeks.

Crude oil inventories posted a surprising drop of 3.823 million barrels to 336.07 million barrels. Dow Jones had a published expectation for a gain of 600,000 barrels, making this headline figure an extreme report.  Up until yesterday, we were even looking for a build of close to 1 million barrels.

The upside was in the gasoline inventories as they rose by 2.25 million barrels to 216.334 million barrels.  Dow Jones was looking for a gain of 1.5 million barrels, and we were going to be happy with anything north of 1 million barrels.

Distillates gained after two weeks of cuts.  The distillates inventory rose by 1.619 million barrels to 167.317 million barrels.

The good news is the return of refineries.  The prior week’s reading of 79.66% jumped all the way up to 81.1% as the new reading, and Dow Jones was looking for 80.0%.  We had set 80% as a floor for what we needed to be kept happy.

The Oil Services HOLDRs (NYSE: OIH) is up 1.05% at $112.45, the Ultra Oil & Gas ProShares (NYSE: DIG) is up 0.2% at $32.54, the United States Oil (NYSE: USO) ETF is up 0.35% at $36.98, and the iPath S&P GSCI Crude Oil Total Return Index ETN (NYSE: OIL) is up 0.34% at $24.37.  NYMEX WTO Crude at 10:44 AM EST is currently up $0.38 at $73.00 per barrel.

Jon C. Ogg
December 9, 2009