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

We 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