Oil Inventories Heading Wrong Way (OIH, DIG, USO, OIL)

The Department of Energy has just released its weekly oil inventories data and those wanting stable prices from oil data may be disappointed.  We are watching the key ETFs around the news via 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 up $0.89 per barrel at $80.03 at 10:38 AM EST after the news.

Crude stockpiles fell by 887,000 barrels (to 336.789 million barrels) versus a Dow Jones target of -600,000.  Frankly, anything negative was going to be a disappointment for us.  And it only gets worse from there…

Gasoline stockpiles fell by 1.755 million barrels (to 209.08 million barrels) versus a Dow Jones target of +100,000 barrels.  We would have been disappointed by anything negative on that figure.  Distillates fell by 328,000 barrels to about 167.4 million barrels.

The big problem in the equation is refineries.  The refining capacity run rate over the last week was 79.44%.  The reading the week before was 79.93% and Dow Jones had a target of 79.8%.  We were looking for the reading to get back above 80%.

The wild card in the last week was Hurricane Ida, which landed as Tropical Storm Ida.  That may account for much of this, but all in all this data is heading in the wrong direction of you want to see stable oil and gas prices.

Oil Services HOLDRs (NYSE: OIH) is down 0.55% at $124.76, the Ultra Oil & Gas ProShares (NYSE: DIG) is down 1.4% at $36.39, the United States Oil (NYSE: USO) ETF is up 0.74% at $40.78 and the iPath S&P GSCI Crude Oil Total Return Index ETN (NYSE: OIL) is up 0.8% at $26.95.

JON C. OGG