Oh by the way, We had and petroleum inventory report. In a day when oil and product prices swung wildly on the latest developments out of Europe one might have a ten-day to forget that sometimes oil inventory reports can matter. Well sometime anyway. Oil prices swung wildly being pushed and pulled in different directions by a multitude of factors. Geopolitical drama in Greece and Italy as well as Iran and Nigeria kept bulls and bears reversing course throughout the day in a wild session. Macroeconomic worries emanating from Italy and Greece added to global recession fears putting downward pressure on prices. On the other hand a bombing in Nigeria and the increasing risk to supply after the recent revelations surrounding Iran and its nuclear intentions. Add to that a wildly bullish distillate draw in the weekly supply report. that is starting to raise supply concerns in the booming US economy. All right booming might be a stretch but is you compare it to the turmoil in Europe the US is looking pretty darn good. Add to that a big drop in China export growth this morning fears about the contagion effect from Europe is continuing to rise. The Italy T-bill auction was better than expected but still at a unsustainable rate.

No wonder the dollar soared. And that did press oil down for a while but as Italian bonds soared and Greece had then did not have a deal on a new Prime Minster it was kind of a relief to focus on supply. Now supposedly they do naming former ECB Vice President Papademos Prime Minister. And US supply is tightening in a big way. In fact according to analysis by Dow Jones Data in the report showed days of cover--or the number of days it would take to exhaust available supplies at existing usage--hit a four-year low for the main U.S. petroleum products, such as gasoline, diesel/heating oil, jet fuel and residual fuel. Diesel fuel led the drop with a stunning draw of 6 million barrels that drop put supply below the five year average. Supply side economics still matter and that drop helped mount a rally that brought back crude oil back despite the economic headwinds created by the European meltdown. The Wall Street Journal wrote that the underlying picture for the euro zone and its currency remains decidedly negative, which is capping the euro's capacity to make further gains. And in a sign of growing investor concerns that Italian political upheaval will hamper fiscal reforms needed to tame debt levels and haul down unsustainable borrowing costs, yields on the country's 12-month treasury bill auction, while under 7%, still came in on average at a euro-era high of 6.087%, although demand was solid. In both Italy and Greece, news is still awaited on the formation of a new government. More broadly, the region's economic outlook is dismal. The European Commission warned of a deep, prolonged recession as it slashed its growth forecasts on the continuing fallout from the debt crisis.

The EIA report on crude supply was also supportive as they reported that commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.4 million barrels from the previous week. Still above average but not nearly as far above average than we were a few weeks ago.

 U .S. crude oil refinery inputs averaged 14.3 million barrels per day during the week ending November 4, 358 thousand barrels per day below the previous week's average. Refineries operated at 82.6 percent of their operable capacity last week. Gasoline production decreased last week, averaging 8.8 million barrels per day. Distillate fuel production decreased last week, averaging 4.3 million barrels per day. U.S. crude oil imports averaged 8.6 million barrels per day last week, down by 336 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.7 million barrels per day, 34 thousand barrels per day above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 750 thousand barrels per day. Distillate fuel imports averaged 102 thousand barrels per day last week. U.S. Commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.4 million barrels from the previous week. At 338.1 million barrels, U.S. crude oil inventories are in the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 2.1 million barrels last week and are in the middle limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 6.0 million barrels last week and are in the lower limit of the average range for this time of year. Propane/propylene inventories decreased by 0.1 million barrels last week and are below the lower limit of the average range. Total commercial petroleum inventories decreased by 15.3 million barrels last week. Total products supplied over the last four-week period have averaged just under 19.0 million barrels per day, down by 1.3 percent compared to the similar period last year. Over the last four weeks, motor gasoline product supplied has averaged about 8.6 million barrels per day, down by 5.6 percent from the same period last year. Distillate fuel product supplied has averaged nearly 4.3 million barrels per day over the last four weeks, up by 3.9 percent from the same period last year. Jet fuel product supplied is 6.6 percent higher over the last four weeks compared to the same four-week period last year.

 While demand for distillates is strong news out of China is raising some demand concerns. Bloomberg News reported that China's exports rose at the slowest pace in almost two years in October as Europe's deepening debt crisis crimped demand, adding pressure on policy makers to support growth in the world's second-biggest economy .Overseas shipments rose 15.9 percent from a year earlier, customs bureau data showed today. The trade surplus was $17 billion, lower than all 24 estimates in a Bloomberg News survey. Imports climbed a more-than-forecast 28.7 percent

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