I just got off the phone with Bloomberg. I told Mark (the Bloomberg reporter) that the news out is mixed …
- Crude oil inventories rose by 4.1 million barrels — much more than anyone was expecting.
- Distillate stocks dropped by 1.8 million barrels — a bullish surprise there.
- Gasoline inventories dropped by 4.7 million barrels — much more than anyone was expecting.
We are awash in oil and gasoline inventories are dropping. Why aren’t refineries making more oil into gasoline and distillates? Refineries operated at 82.7% of their operating capacity last week — a drop when a gain was expected.
It’s NOT that refiners can’t make a profit at current prices. Valero Energy, the largest U.S. oil refiner, said its first-quarter profit rose 18 percent on increased margins for processing crude into gasoline and other petroleum products.
Refiners’ explanation for the lower run rate will be interesting. I’m sure maintenance will be cited (it always is). However, something else to consider …
While GDP dropped 6.1% in the first quarter, that’s a backward-looking indicator.
Meanwhile, consumer confidence just rebounded. On Tuesday, the New York-based Conference Board said that its Consumer Confidence Index rose more than 12 points to 39.2, up from a revised 26.9 in March.
You can read the EIA report by CLICKING HERE.
Stay tuned!
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Sean, this smacks of the same manipulation that had fuel prices waaay out of line with the (albeit huge) demand last summer. Now I HATE socialization of ANYTHING in our lives but if this blatant manipulation continues, all bets are off. I could easily envision the talking heads in Washington moving to fix fuel prices as it did with several things during Eisenhower admin. The true danger with allowing this supply manipulation is the damage to the any sort of recovery process. We all want to make money, this is simply rape.