Here we go again with spotty reasoning of why oil prices are going up.
The EIA said crude stocks fell by 2 million barrels last week. Analysts were looking for a drop of 1.2 million barrels according to a poll by energy research firm Platts.
Distillates, used to make diesel fuel, jet fuel and heating oil, rose by 1.3 million barrels while gasoline supplies rose by 2.1 million barrels. Analysts were looking for an increase of 2.4 million barrels in distillates supplies and a decline of 500,000 barrels in gasoline stockpiles.
So the supply of things that oil is made from goes up due to demand destruction but the amount of actual oil barrels goes down. So this sent the price up? Supposedly the oil itself isn't worth anything unless you turn it into gas or distillates. The reason why there is lower crude stocks is because it is so damn expensive and refiners aren't loading up on it. Some are actually reducing utilization since crack-spreads are so junk now.
I think alot of this oil supply drops are simply due to refiners not buying as much oil since the demand for the gas they make with the oil is out of is going down. Why would any refiner in their right mind pay to stockpile $143 oil?
However the idea that lots of traders are going long before the 3 day weekend and the ECB raising interest rates (and any potential hawkish statements that they could issue) makes much more sense to me. Now if there was a hurricane building in the Gulf of Mexico oil would that $170 a barrel that OPEC wants in two days.
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