Ok, the easy way to start today’s report is to say that oil hit a 15 month high in yesterday’s trade. Yet how we got there and why we are pulling back has more subplots than a daily television soap opera. There were so many stories pulling at the heart strings of the oil trader it is hard for anyone to keep them all straight. Some happy and some sad and some just plain freaky. Over night oil is pulling back on news that China's central bank raised interest rates on its three month bills for the first time since August, a day after it promised to keep credit growth in check. This slowdown helped end some bullish momentum that was achieved in yesterday’s session.
Of course any good energy report should start with an analysis of the weekly inventories from the Energy Information Agency which is always a factor in the decisions of both the buyers and the sellers. This inventory report, like some of the others before it, was supposed to be all about the impact of colder weather. Heating oil bulls were hoping that this recent cold snap would lead to another large drawdown in overall distillate supply. Yet the EIA reported that distillate inventories fell only by a mere 300,000 barrels. This was a disappointment to the bulls that were hoping supplies had melted away faster than the polar ice caps. When they failed to live up to expectations, the entire petroleum complex that had rallied in anticipation of this report, broke hard in an instant.....Read the entire article.
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