A tsunami of oil supply helped sink the petroleum complex as refinery runs fall and demand falters. No, the sell off had nothing to do with the CFTC speculation hearings going on in Washington as some of the anti free market crowd might want you to believe. It was all about a incredible surge in supply and a disturbing trend of weakness in demand as reported in yesterday's oil inventory report.
The market that was already weakwhen the EIA reported thatU.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 5.1 million barrels from the previous week. That puts supply at a whopping 347.8 million barrels well above average range for this time of year. Total motor gasoline inventories fell by 2.3 million barrels last week but with the summer driving season winding down it is hard to find anyone who cares.
Where supplies are really getting out of hand is in distillates where it was reported that supply increased by 2.1 million barrels last week putting them a massive 26.5% above year ago levels.The petroleum complex sold off because of its seasonal peak the normal fears about supplying heating oil for the upcoming winter will be nonexistent.
Demand was lousy as well. The EIA reported that total petroleum products supplied over the last four-week period has averaged 18.7 million barrels per day, down by 4.1 percent compared to the similar period last year. Over the last four weeks, motor gasoline demand has averaged 9.2 million barrels per day, up by 0.8 percent from the same period last year. Distillate fuel demand has averaged about 3.3 million barrels per day over the last four weeks, down by 10.7 percent from the same period last year. Jet fuel demand is 13.3 percent lower over the last four weeks compared to the same four-week period last year. These numbers are not the type you want to see. The EIA also reported that U.S. crude oil refinery inputs averaged 14.6 million barrels per day withrefineries operating at 84.6 percent leading to a drop in gasolineproduction and distillate fuel production.
Sell September crude at 6650 - stop 7170.
Sell September RBOB at 19000 - stop 19350.
Sell September heating oil at 18500 - stop 18600.
We're short September natural gas from apprx 390 - lower stop to 400!
The Dan Flynn Corn & Ethanol Report
The December Corn traded higher in the overnight session.
The market settled at 331 3/4 which was up 3 3/4 cents.
The range was 333 to 328 1/4. A little profit taking ?
You Bet !
It helped that stocks were trading higher and the U.S. Dollar lower.
After yesterdays action this can only create more selling opportunities.
On the Energy Front we had a spike after yesterdays washout.
This is setting the table for another leg to the downside.
Have a Great Trading Day !
Open a trading account with Dan Flynn and PFGBest today !