Energy Inventories

In its latest weekly energy inventory report, the Department of Energy [DoE] announced that after five straight weekly draws, crude oil inventories increased modestly in the latest week.  However, as the chart below shows, crude oil stocks remain well below average. 

At first glance, energy markets have sold off sharply on the news.  However, we don't need to tell you that things can change quickly in these markets, especially with a Fed announcement coming later in the day.

click to enlarge

Distillate fuels also showed a build in the latest week, and unlike crude inventories, stockpiles are above average and the spread versus average is at its highest levels of the year.

Finally, unlike crude oil and distillates, gasoline inventories actually declined slightly during the week.  At current levels the spread between the current and average spread is the lowest it has been all year.

Comments

[sandiver:]

A couple of points:

what does this say? (like other comments, I find that although I like the bespoke investment group's graphs their analysis is non-existant)

why is the average since 1984 relevant? What about year on year inventories? Last year is more relevant to me than 1984 (I visited the Olympics in LA then and enjoyed it - but relevance to current investing?)

Finally gas inventories declining means one of at least two things (maybe more - I admit to no PhD in econ) -

A. people used more gas than expected (which I doubt)
B. refiners aren't producing as much gas as before (because their profit margins just aren't there)

The real question is a seasonal one: will fuel inventories get to their seasonally adjusted levels or will we see little further distillation due to lack of profit?

A final political statement - with the SPR packed to capacity and a FED asleep at wheel, there's little hope for what would solve this problem - a simultaneous serious draw on SPR and an INCREASE in interest rates.

done deal.

2008 Jun 25 07:46 PM

[King of Sanity:]

I believe this report about as much as I do in the "Great Pumpkin" What oil company in their right, but greedy mind, would ever say their inventories are down. Why should they? Because this would expose the truth of the matter and they would have to own up to their lies. Until we purge this pathetic Bush administration out of office this fall, we are never going to make headway with getting to the bottom of the oil crisis. Just think, we were about 575 votes away in the "sunshine state" from having another period of peace and lots of cheap oil. Bush has been nothing short of an absolute disaster for our nation, the Middle East, and the rest of the world. Please. please, no more pathetic republican administrations!

2008 Jun 25 08:07 PM

[richjoy:]

Oh yes!...yes, yes, yes!...please give us another Carter Administration!

Agreed, the Bush Administration is a disaster.

However, both parties have given us disasters. Which is why we keep going from one to the other.

As for the SPR, if we draw on it to relieve high prices, what will we do when Isrial has attacked Iran, Iran has blocked the Straights of Hormoz, and we have no Middle East imports?...that is why we have a STRATEGIC Petroleum Reserve! Expensive gasoline is better than no gasoline. (No doubt you are to young to remember the blocks long lines to gas pumps in the 70's)

2008 Jun 26 09:00 AM