Oil Bull Knockdown.

Oil bulls got a shot to the solar plexus from the American Petroleum Institute but it may be a downgrade from Fitch rating services that delivers the knockout blow. The American Petroleum Institute blindsided the global oil markets last night by reporting a spectacular 7.5 million barrel weekly build in US crude oil supplies. The oil seemed to come out of nowhere and made the oil bulls get nervous but the bulls vowed to wait for what the Department of Energy might say today.

Will it really matter if another PIG goes down? Overnight the euro got hammered and the dollar soared on news that Fitch Ratings, as reported by Marketwatch, downgraded Portugal's long-term foreign and local currency issuer default ratings to AA- from AA on Wednesday. Fitch said that the outlooks on the long-term IDRs are negative and the downgrade reflects significant budgetary underperformance in 2009. Marketwatch quotes Douglas Renwick, associate director in Fitch's Sovereign team as saying, A sizeable fiscal shock against a backdrop of relative macroeconomic and structural weaknesses has reduced Portugal's creditworthiness.

Talking about sizable shocks how about that crude drop! It seems that some of those import drops into the North East due top that freaky winter storm self corrected along with the stormy seas. Oil imports rebounded from surprise drops in California and the Northeast. The API said that crude Imports were up by 1.3 million barrels a day to a hefty 9.19 million barrels.

The API reported that gasoline supplies fell by 81,000 barrels with increased demand and refinery turnarounds helped supply fall. Distillates fell as refiners are focused on turnarounds and maxing out on more profitable gas. Mark Shenk of Bloomberg News points out those higher profits for making gasoline are prompting refiners to increase motor fuel production to a record for this time of year. Mr. Shenk points rose 2.3 percent to 8.96 million barrels of oil a day. That is the highest level since they began to keep records all the way back in 1983. Mr. Shenk says this was inspired by the fact that the crack spread has almost doubled to $13 this year. Demand is also rising! Barbara Powell of Bloomberg says that MasterCard Spending Pulse reported that U.S. gasoline consumption rose last week to the highest level since June, the fourth increase in five weeks. Motorists bought an average 9.66 million barrels of gasoline a day in the week ended March 19, the second-biggest credit-card company said in its SpendingPulse report. Consumption was up 1.4 percent from the previous week and 1.8 percent above a year earlier. Demand for the past four weeks averaged 9.55 million barrels a day, the highest level since the week ended July 3 and 2.5 percent above the same period in 2009. Total fuel demand year-to-date is up 1.5 percent from the same period of 2009.

OPEC put off their September OPEC meeting till October because of Ramadan. That means another 30 days of cheating on production! Yippe!. Once again the market will focus on the dollar and the euro. The market's worst fear is that the crisis in Greece will spread to other PIIG nations (Portugal, Italy Ireland and of course Greece). That has put the market out of its comfort zone of being short the dollar and long the euro and of course being long crude oil. If more PIIGS start to fall then so too will oil. Forget about China demand for the moment and focus on what is really moving the market. Call for the latest updates. We have been playing the ranges! Call me at 800-935-6487 or email me at pflynn@pfgbest.com to open your account. See me every day on the Fox Business Network.