Oil may have just gotten some wind taken out of its sails after flirting with $50.00 per barrel late yesterday. The DOE just released its weekly inventory data showing another build across the board. Crude rose another 2 million barrels to 353.3 million barrels, gasoline rose 3.2 million barrels to 215.7 million barrels, and distillates rose roughly 100,000 barrels to 145.5 million barrels.
We were expecting only 1 million barrels crude oil inventories and were even expecting a decrease in gasoline inventories. All of this was with refineries running at 82.1% capacity rather than the 82.7% seen the week before. Imagine what these increases in inventories would have looked like if our refineries were just running at the same capacity as before. This is continued demand erosion, which we keep seeing met by supply erosion in the number of rigs that get idled each week and month.
We have seen an immediate reaction in the controversial ETF, the United States Oil (NYSE: USO), where shares are now down 3% at $28.50. Even the iPath S&P GSCI Crude Oil Total Return Index ETN (NYSE: OIL) is down 3% at $18.50 after the news.
JON C. OGG
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