Energy Report: Anti-Climatic

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Oil prices are easing a bit as the Energy Information Administration (EIA) status report was a bit anticlimactic. I don’t think anyone would argue that the report was bullish, yet it failed to provide the firepower needed to keep the buying coming in the post covid price highs. The EIA reported that crude oil inventories fell by 8.0 million barrels from the previous week. That drop in supply, believe it or not, put supply 2% below the five-year average for this time of year. In other words, the covid oil supply glut is totally gone. Yet despite that, inventories increased by 0.7 million barrels last week and are about 2% below the five year, that happened even with another million barrel plus release from the Strategic Petroleum Reserve. That crude draw came as the EIA had the biggest crude adjustment in history which suggests that U.S. oil supplies have been tighter than the agency has been reporting.

Yet gasoline failed to live up to the bullish expectations. It did not help that Saudi Arabia cut the selling price of oil to India because of covid demand destruction, reminding traders that risk is still out there. Weekly gas demand came in at 8.86 million barrels a day, a drop of .12 which was less that the traders were looking for. Total motor gasoline inventories increased by 0.7 million barrels last week and are about 2% below the five-year average. Still, we saw a 2.9 million barrel drop in distillate supply reflecting more air travel and farmer planting demand, yet week over week demand fell. Refiners also ramped up less than expected. The EIA reported that U.S. crude oil refinery inputs averaged 15.2 million barrels per day which was 225,000 barrels per day more than the previous week’s average. Refineries operated at 86.5% of their operable capacity last week. Gasoline production decreased last week, averaging 9.1 million barrels per day. Distillate fuel production decreased last week, averaging 4.5 million barrels per day.

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