Thursday, September 30, 2010

Phil Flynn: Exporting America!

A surprise drawdown in gasoline supply as the US becomes an exporter of more products as refiners sink deep into seasonal maintenance. Strong data out of China helped offset concerns about European sovereign debt. Add to it a weak dollar and you have created the right condition for an energy rally. Also of note China has now surpassed the United States as the biggest consumer of Saudi oil yet we may see some slowing as China takes steps to bring down exploding property prices.

Inventories seemed to be the major driving force for yesterday steady methodical rally. The EIA reported that motor gasoline inventories fell by a shocking 3.5 million barrels last week even as gasoline production increased to 9.2 million barrels a day and refinery runs scrapped the bottom at 85.8 %.It is clear that the US is exporting more gas and diesel as demand stagnates here and is robust in other places. The EIA shows that four moving average for gas demand is averaging 9.1 million barrels per day which is up just 0.9% from last year percent from the same period last year.

Yet gasoline supply fell as refiners look overseas. The US is now a net gasoline exporter for the first time since 1961. Reuters News reported today, “US oil refiners are shipping fuels to foreign markets to restore profits battered by sputtering domestic demand, signaling a historic shift in the global oil trade. Gasoline guzzling Americans have cut consumption while emerging markets including nearby Latin America have seen demand grow beyond the capacity of local refineries.....Read the entire article.


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