Phil Flynn: Crude Surge!

Let’s forget all that quantitative easing stuff for a moment and focus on some of that old time supply and demand stuff. The Energy Information Agency reported that crude oil supplies hit the highest level ever, in this county, for this time of year. Well at least since the EIA has been tracking monthly data. After a whopper build of 5.0 million barrels, we see supply hit a hefty 366.2 million barrels which according to Dow Jones newswires is the highest level of supply at this time of year since 1931. To put that in perspective, that was a year when the “Model A” was the car of choice for many Americans and Herbert Hoover was President.

Of course this bounty of crude supply did not translate to gasoline supply which according to the EIA fell 4. 4million barrels last week and probably kept the entire petroleum complex from falling totally apart. Gas exports were a contributing factor as the strike in France created an increased demand for our supply. Gasoline production increased last week, averaging 9.2 million barrels per day while imports a mere 1.0 million barrels per day. Over the last four weeks, motor gasoline demand has averaged 9.0 million barrels per day, down by 0.8 percent from the same period last year.

Distillates, according the EIA, fell by 1.6 million barrels. If the French had not been siphoning off supply, that number might have been larger. The impact of the strike influenced our demand numbers which averaged 3.9 million barrels per day over the last four weeks, up by 8.7 percent from the same period last year. Distillate fuel demand has averaged 3.9 million barrels per day over the last four weeks, up by 8.7 percent from the same period last year.

The EIA reported that refineries operated at 83.7 percent of their operable capacity last week and over all oil use hit the lowest level since December. Demand is still weak over all and may be restricted somewhat by the price spike caused by the QE2 threat! With oil trading in a tight trading range for the majority of this year it is time to get Phil's daily buy and sell points. Just call him at 800-935-6487 or email him at pflynn@pfgbest.com. You can also catch him every day on the Fox Business Network!


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