The oil markets charged up yesterday after the EIA released its weekly DOE Inventory Report despite meeting market expectations of product draws in the gasoline and distillates, and an 8th consecutive the build of commercial crude oil stocks. Two major triggers seem to have caused the reaction in NYMEX RBOB hitting a recent high of 2.7148 then settling down to 2.6837, up 5.57 cents on the day, along with NYMEX ULSD (HO) closing up 3.29 cents to 2.9306. NYMEX Crude (WTI) ultimately finished down 12 cents to 93.76. First, total gasoline stocks, over the past 4 weeks, are down by 8.1MMbs and now stand at only 2%, or a 4.1MMb surplus to the five year average. The December contract is currently in a 2 cent backwardation, or is 2 cents higher in the front month (December) relative to the March RBOB contract. The market is reflecting its anxiety with current supply. Although current levels are higher than last year, the comparison does not include Hurricane Sandy, so consider that PADD 1 (East Coast) gasoline stocks have shrunk to 52.8MMbs, or only at a 4.3% surplus to the five year average. Second, on the demand side, the market also focused on the 3rd straight increase in total product demand of 20 MM b/d. However, when looking at the content of the demand, gasoline demand was down along with heating oil. The big demand increase came from "other oils", to the tune of 1 million barrels/day.
Currently, it looks like the markets are taking a breather as NYMEX ULSD (HO) is up 28 points to 2.9339, NYMEX RBOB is down 42 points to 2.6795, NYMEX Crude (WTI) is up 30 cents to 94.06, and ICE Crude (Brent) is down 11 cents to 108.17.
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