Phil Flynn: Gulf Coast Surprise

What fun is an oil inventory report without a little surprise now and then. The Gulf Coast, famous for its beautiful beaches, its spicy cuisine, and let's not forget to mention its oil refineries and oil import terminals, gave the weekly EIA data a Louisiana kick. A surge in Gulf Coast oil imports caused a large, whopping jump in U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) of 4.7 million barrels from the previous week. That puts supply at 337.6 million barrels and keeps it in the upper limit of the average range for this time of year. Thanks to that Gulf Coast surge!

But let's go even further south, down to Brazil! Blame it on Rio! Well not yet anyway but in the future Brazil is going to be a major oil player. The EIA said that, "Brazil will be responsible for some of the world's largest increases in oil production in the coming decades. Advances in seismic imaging have enabled the discovery of offshore "pre salt" deposits of oil in Brazil's Campos and Santos Basins.

These pre salt fields, so-called because they lie under massive layers of salt, are located 18,000 feet below the ocean floor under more than 6,000 feet of salt. Brazil already produces 2.1 million barrels per day (bbl/d) of crude oil and lease condensate, yet just became a net exporter in 2008. Pre salt development, coupled with the ability to meet a large share of domestic demand with Biofuels, is projected to transform the country into a major oil exporter."

You might also blame Rio for the drop in distillates. The EIA say's distillate fuel inventories decreased by 4.3 million barrels last week and are in the middle limit of the average range for this time of year. The drop comes as demand surges for diesel as harvest is underway.

Yet demand for gasoline continues to be poor. The EIA says motor gasoline inventories decreased by 1.4 million barrels last week and are near the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week.

What will be the surprise for today? My guess is a bigger than expected injection on gas storage! Report today!

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