The oil bears shot down the oil market before they saw the whites of their eyes. There was a post OPEC plus oil market meeting massacre that reminds you of the Boston Massacre that helped lay the groundwork for the American Revolution. OPEC’s shot at stabilizing oil prices was heard around the world and was universally rejected as not enough or more of the same. Perhaps the traders wanted to see a bigger cut in production. Or they just assume that U.S. shale oil production will fill the void. Perhaps they were just in a hurry to get out and celebrate our independence and wanted to dump positions so they could get a good spot at the fireworks display. Yet the market action seems to suggest it is really fearing softening demand even as demand softness looks to be temporary, and we get a report that signals demand in the U.S. is near a record high.

The American Petroleum Institute reported that the U.S. crude oil supply fell last week by 5 million barrels, at least 2 million barrels more than expected. Gasoline supply also fell by 387,000 barrels, not quite as much as the 2.2-million-barrel drop expected, but distillates fell by 1.7 million barrels putting supply in that category more than 7% below the five-year average. This was the type of report that normally would have created bullish market fireworks, yet afterwards the battle-worn bulls had retreated from battle, fearing to make a stand ahead of the holiday.

The Saudi Arabian Energy Minister Khalid Al-Falih is “enthusiastic about where oil demand is going” yet the market was not.The Saudis for their part say they can stand up to shale as well as al-Falih said in a news conference Monday that“I have no doubt in my mind that U.S. shale will peak and the decline like every other basin in history. The question is when. Until it does, it would be prudent for us that have a lot at stake also for those of us who want to protect the global economy.” Yet despite more signs that the Shale patch is struggling financially, the oil market for the moment is believing that shale can go on and pursue oil production happiness even if a prolonged price drop will cause more shale spending cutbacks.

In fact, the oil market sell-off all but assures that Fed Chairman Jerome Powell will put his John Hancock on a Fed Statement that will cut rates this month along with other signers that vote on monetary policy. The drop-in oil will provide the Fed the cover they need as the drop-in oil should keep inflation pressure subdued.

Of course, this Independence Day swoon did not come fast enough to save you much at the gas tank ahead of the Holiday. AAA reported that gas prices were up to $2.748 last night, up from $268.4. Maybe we can blame OPEC for not having their meeting earlier. Maybe we can blame Philadelphia, home to Independence Hall where we had the signing of the Declaration of Independence, but also the Philadelphia Energy Solutions (PES) refinery. AAA says that last week, PES announced that they will permanently close the South Philadelphia refinery this month, which is the oldest and largest refinery on the East Coast. The announcement came following a June fire and explosion at the refinery, which produces 335,000 barrels of crude per day (42 U.S. gallons per barrel). While gasoline stocks from Canada, neighboring refineries, and the Colonial Pipeline will help backfill supply, retailers will likely face increased transportation costs which will drive up prices in the Northeast and surrounding regions.

Remember that because of the Independence Day holiday you have the God given rights to two energy reports from the Energy Information Administration. Yes, both the petroleum status report and the natural gas storage report. Both reports can provide some fireworks. The petrol report will use the API as its base case for bullish or bearish. The Nat gas injection number to beat is 83 bcf.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the Pursuit of Happiness. Go out and Celebrate America! Happy Fourth of July!Your right to prosper should be in the Constitution!

Update/correction: I wrote that the Philadelphia Energy Solutions produced oil when I meant to say gasoline. One loyal reader of The Energy Report pointed this out with the tag line “ignorance”. I want to assure him and all of you that I know that oil does not come out of refineries but goes through refineries. We all know that oil comes from Leprechauns.