Oil inventories higher than before summer

EMI Global Equity Index

9/8/10

Change

Change

2010 YTD

2010

From

From

Change

7:06 AM

Yesterday

Yesterday %

%

US/Dow Jones

10,341

(107)

-1.03%

-0.8%

Can/S&P-TSX

12,102

(43)

-0.35%

3.0%

Lon/FTSE

5,373

(35)

-0.65%

-0.7%

Paris/Cac 40

3,620

(24)

-0.66%

-8.0%

Germany/Dax

6,078

(39)

-0.64%

2.0%

Japan/Nikkei

9,024

(201)

-2.18%

-14.4%

HongKong/HangSeng

21,089

(313)

-1.46%

-3.6%

Aussie/SYDI

4,537

(36)

-0.79%

-7.1%

China/Shanghai A

2,823

(3)

-0.11%

-17.9%

Brazil/Bvspa

66,747

69

0.10%

-2.7%

EMI Global Equity Index

14,173

(73)

-0.51%

-3.5%

As mentioned yesterday the EIA will release their latest Short Term Energy Outlook later today. I am expecting a downward adjustment to the projections for oil demand growth for the remainder of 2010 as well as 2011. I am expecting a similar adjustment in Friday morning’s IEA monthly oil forecast as the global economic recovery is simply stalling. If oil demand stalls, the only possible way the overhang in inventory is going to begin to recede will be if OPEC reigns in supply and cuts production at their October gathering. If not, I would expect that the industry will be entering the upcoming winter heating season at near record high inventory levels for pretty much everything.

Today the oil inventory cycle will get underway when the API releases their weekly report after the oil market closes while the EIA data is expected to be released at 11 AM tomorrow morning. The weekly oil inventory cycle gets underway with the release of the API data late this afternoon followed by the more widely watched EIA data at 10:30 AM EST on Wednesday and thus the market will get the latest snapshot of the current oil fundamentals. My projections for this week’s inventory report are summarized in the following table along with a comparison to last year as well as the five year average for the same week. I am expecting builds in everything except gasoline which should show a modest decline as a result of the long holiday weekend in the US. Crude oil stocks are expected to grow by about 800,000 barrels. After last week’s significant build, I am expecting imports to not be nearly as robust as last week but enough to offset the minor increase I am projecting for refinery utilization rates of 0.1%. If the EIA data is in sync with the projections the year over year surplus will widen to 25 million barrels while the overhang versus the five year average for the same week will come in at 40.3 million barrels.

Projections

9/8/10

API

Current

Change from

Change from

Results

Projections

Last Year

5 Year

mmbls

vs. Proj.

vs Proj.

Crude Oil

0.8

25.0

40.3

Gasoline

(0.3)

17.9

28.6

Distillate

0.6

10.2

33.4

Ref Change Level

0.1%

-0.1%

-0.1%

Utilization %

87.1%

87.2%

87.2%

<< Page 2 of 3 >>
Comments
comments powered by Disqus