July 30, 2008

You're looking a little desperate...

The EIA report came out this morning and had some interesting numbers. So far, the traders see it as bullish. So do the talking heads on Bloomberg, save one who picked up on the seasonal adjustment as refiners begin the shift to fall and winter formulations.

But there's another issue as well... people aren't using as much. Margins on gas are tight. Therefore, refiners have been producing less which is why the dramatic drawdown in inventories. Refiners, simply put, are putting more emphasis on higher margin products like distillates. Now, want me to give you some back up numbers? How about this...

Crude oil supplies declined 81,000 barrels to 295.2 million barrels last week, the report showed. A 1.3 million barrel drop was forecast in the Bloomberg News survey.

Distillate Supplies

Inventories of distillate fuel rose 2.4 million barrels to 130.5 million barrels last week, the report showed. A gain of 2.05 million was forecast, according to the median of 12 analyst estimates.

So, Oil inventories dropped much less than expected (bearish for oil prices) and distillate inventories rose far more than expected. Everything fits... still, Goldman and the traders are focusing on gasoline inventories and bidding up oil. Goldman, for it's part, has dropped it's $200/bbl by the end of the year projection and replaced it with $149/bbl.

Lehman is going in the opposite direction. Honestly, seeing the evidence and not really being prejudiced one way or the other, I'm going with Lehman.

Posted by mcblogger at July 30, 2008 02:09 PM

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Thanks for trying,


Posted by: R. Spacedark [TypeKey Profile Page] at July 30, 2008 02:17 PM

You're welcome... I think it's going to be a blast watching the energy complex collapse.

Goldman saying there's no demand destruction is laughable. Tell that to the Chevy and Ford dealers who are swimming in new and returned giant SUV's.

Posted by: mcblogger [TypeKey Profile Page] at July 30, 2008 08:22 PM

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