Another Dollar dilemma
Energy Report
by Phil Flynn
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2008-08-21
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The Dollar is taking it on the chin as the market awaits the next shoe to drop and we get back on pins and needles. Now we all have to wonder once again just how bad this credit crisis will get and which bank is going to be the next one that comes tumbling down.
How bad are things at Fannie and Freddie and will that mean that money will run to oil for cover. The US Treasury is dropping hints that a bailout is now a possibility. That means that it is time to worry about systemic risk and try to hide in commodities.
Of Course yesterday the market seemed more confused about the weekly crude oil inventory stocks report. Oh what to focus on. Should you focus on the big whopper crude build or the big whopper gasoline draw? Let's focus on both for a minute. The EIA Reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 9.4 million barrels from the previous week. Yes, that is 9.4 million barrels the biggest one week increase since 2001 and the fifth biggest in history. That is a flood of crude that makes Noah's flood look like a sun-shower. That pulls oil supply up to 305.9 million barrels and puts them well above the five year average. Why the
surge? It was the imports, my friend. After Hurricane Edouard passed the EIA said that cru de oil imports rose to nearly 11.0 million barrels per day last week. That was up 1.3 million barrels per day from the previous week. That puts the four week average at 10.2 million barrels per day, 93 thousand barrels per day above the same four-week period last year. That does not seem like a crude shortage.
But as far as gasoline the story was not at all bullish. The EIA says that total motor gasoline inventories fell by 6.2 million barrels last week and are below the lower boundary of the average range. Of course they fell as refiners continued to take a holiday. The EIA says that U.S. crude oil refinery inputs averaged 14.8 million barrels per day during the week ending August 15, relatively unchanged from the previous week's average and average that is below normal for this time of year. Refineries runs came in at a dismal 85.7 percent. Gasoline production did rise last week but averaged only 9.1 million barrels per day. Gasoline supplies are worrisome but so too is the refines reluctance
to produce supply.
As far as distillates the EIA said that inventories increased by 0.5 million barrels, and are in the upper half of the average range.
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Phil Flynn
Phil is one of the world’s leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets.
Energy Report has contributed 212 issues.Our users give the newsletter an average rank of 8.4/10 (24 votes)
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