It seems that the oil market may be getting irrational again according to this.
Crude jumped after an estimate from Platts, the energy research arm of McGraw-Hill Cos., predicted a 3 million barrel decline in gasoline stocks for last week and an increase in refinery utilization of 0.4%.
Okay that looks good on the surface but check out these numbers on August refinery utilization.
2008-Aug 08/01 87.0 08/08 85.9
So that would put utilization at 86.3 which is a full 5.3% less then same time a year ago. The gasoline stocks are slightly more then last year (202.8 vs. 201.9) when oil was cheaper and crack spreads were much higher.
So I was just wondering why the refiners would suddenly ramp up utilization like that when they have been steadily dropping it earlier in the month? You would think that gasoline demand wouldn't be spiking for any reason that I could see. I don't think Americans will be trading in their Sedans for SUVs anytime soon.
I guess Platts is saying this because gas stocks have dropped by 6.4 million barrels since the 1st of August while crude oil dropped $30 a barrel. Perhaps they are saying that the drop will continue. I guess they figure that refiners are going to buy a lot of cheaper oil while they ramp up production. But who are they going to be selling that gas to? I guess we have to wait for the Wednesday report before we can tell what is happening for sure.
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