The Gulf Coast to the Rescue!
The oil market was prepared for the worst but they got the best as Gulf Coast imports surged to make up for the loss of crude from the Trans Alaskan Pipeline. The Energy Information Agency reported that U.S. commercial crude oil inventories increased by 2.6 million barrels from the previous week damping fears that the localized issue in Alaska would somehow bring the rest of the country's supply down.
Builds in products also raise the issue of demand as it appears that higher prices are starting to take their toll. The EIA reported that motor gasoline inventories increased by 4.4 million barrels last week and are above the average range for this time of year. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 1.0 million barrels despite the cold weather even as heating oil supply fell 1.0 million barrels in the Northeast.
Overall, total commercial petroleum inventories increased by 2.4 million barrels last week, total products supplied over the last four-week period has averaged 19.5 million barrels per day, up by 3.8 percent compared to the similar period last year.
Over the last four weeks, motor gasoline demand has averaged 9.0 million barrels per day, up by 2.0% from the same period last year. Distillate fuel demand has averaged 3.7 million barrels per day over the last four weeks, up by 1.8% from the same period last year. Jet fuel demand is 4.6% higher over the last four weeks compared to the same four week period last year.
Yet despite the bearish implications of this report it was fears that China would soon raise interest rates to head off inflation that brought on the oil selloff. If the Chinese want a surefire cure for inflation, I can help them out! Allow their currency to float. Free the Yuan!
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at email@example.com.