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Oil Inventories Working Their Way Back to Average Levels

For the last three weeks, every Wednesday we have been getting the crude inventory reports showing falling inventory levels. The analysis that follows in the news outlets continues to be bullish citing only the single inventory level as a guide. The reports also says that imports are way down and, most importantly, refiners are only working at 80% of capacity. 80% OF CAPACITY!!
Lets take a look at this in real world terms. You have a store that sells barrels of crude oil, and you have a stock room full of these barrels. Now your customers, who use your product as an input to produce a final product, are using 10%-20% less than they had been previously. What would you do? You would deplete the stock in your back room before you purchased more. In addition you would scale back your future purchases in order to keep your inventory lower. Translation - Less imports.
It would be ridiculous if oil inventories were not falling.
The analogy is simple yes, but lets stop pretending that the inventory report is anything more than an excuse for speculators. If the report was taken seriously as a trading guide, wouldn't it take more than 2 or 3 seconds to peruse the report and make a serious decision on whether to buy or sell. Oil goes up, and oil goes down (although not as much as I think it should) but we would all be better off with real analysis.

Crude Oil Inventories Show a Sharp Decline

Today's stories on the crude inventory numbers again give the headline number with no analysis. Headline says, "Crude Rises on Decrease in Stocks". Lets take a look at the report.
1) Oil refineries are running at 80.6% of capacity. This is extremely bearish.
2) Refinery inputs were 233,000 barrels per day below last weeks average. Bearish.
3) U.S. Crude oil imports were down 764,000 barrels per day from the previous week. Bearish.
4) For the last 4 weeks imports have averaged 1.5 million barrels per day less than the same period a year ago. Bearish.
5) U.S. crude inventories are near the upper limit of the average range for this time of year. Bearish
6) Total motor gasoline inventories are above the upper limit of the average range. Bearish.
7) Distillate fuel demand is down 14.8% year over year, jet fuel demand down 3.1%.
Bearish

There is more, but you should get the picture. A decline in stocks right now is due to a demand problem, not a supply problem. All of the above statistics point directly to a decrease in demand for crude and distillates. If refineries were running at 90+% of capacity, maybe, maybe we could see a supply problem, but not now.
One other thing, the latest COT report shows approx. 227,000 money managed fund long contracts and about 24,000 short.
As the saying goes,"The market can stay irrational longer than you can stay solvent."

Oil Bubble Breaking? Barron's Outlines the Case, But the Argument is Weak

Enke makes the same arguments we've heard over and over, there is nothing new here. The bubble will pop, just like tech and housing, the mainstream media stops calling it a bubble and starts writing about why, "this time it's different"

Who's Really to Blame for Rising Oil?

Crossing the T. Famous last words, "This time it's different"

Who's Really to Blame for Rising Oil?

Sellers don't dictate the bid, buyers do. Finally. They should say that on the news at night instead of the ridiculous justifications they come up with one day, which are non existent the next.